Global Business Solution – Report on Coles Australia Establishing in India

Global Business Solution – Report on Coles Australia Establishing in India
Table of contents:

Executive summary

Introduction

Coles Australia – the current position of the company and business environment

Problems Coles faces while establishing business in India

a. Current trade and fiscal policies
b. Marketing environment
c. Coles organizational structure
d. Management of Coles
e. Business environment of the company
f. Customer-company relationships
g. Domestic and international policies

Solutions and recommendations

Conclusion

References

Executive summary

The report explores the business development of Coles and the company’s market expansion to India. The report studies the current business environment and potential of the company to establish business in India. On the ground of the information collected, recommendations are provided for Coles to launch business in India.

Introduction

The development of the modern business is closely intertwined with international market expansion. In actuality, many companies operating in domestic markets attempt to expand their operations internationally to gain a larger market share, enter new markets and to improve their position in the market. In fact, the international market expansion does contribute to the improvement of the position of a company in the market because it provides the company with larger opportunities to increase its production and sale rates that increase the profit growth and increases the market value of the company. In addition, the expansion of business internationally opens larger prospects for the ongoing and steady growth of a company. In such a situation, it is quite natural that more and more companies attempt to expand their operations internationally. In this respect, it is possible to refer to Coles Australia, the company based in Australia and conducting its business in Australia mainly. Today, the company attempts to expand its business internationally but to meet this goal the company has to conduct the detailed analysis of the current situation in the market at both domestic and international levels and assess adequately the potential of the company for a consistent international growth. In this regard, it is possible to conduct a detailed study of the company and market and develop recommendations on the possible measures Coles Australia can take to enter new markets successfully and expand its operations internationally. At this point, it is important to stress the potential of the company to expand its business internationally because it has already developed its business in the domestic market in Australia and can start its operations abroad today, when the competition has been weakened by the global economy recession, which though may need substantial financial resources from the part of Coles Australia to complete its international market expansion plans successfully, especially taking into consideration the fact that Coles focuses on the expansion to Indian market, which is growing fast and has good prospects in terms of the further development of business in this country.
Coles Australia – the current position of the company and business environment

In actuality, Coles Australia is a successful company that has built up a chain of supermarkets nationwide. Today, the company operates in the domestic market but attempts to expand its business internationally to get access to new markets and, thus, to get new opportunities for the business development and expansion of its market share and market value through the rise of sales and profit growth. In fact, the company provides its customers with a wide range of products and services which help the company to maintain its highly competitive position in the domestic market and lays the foundation to its strategy of the international market expansion. The company attempts to enter new market and accumulates resources, both human and financial, to launch its expansion campaign and to gain a better position in the international market. In this regard, it is worth mentioning the fact that the company focuses on the international market expansion because this strategy naturally derives from the contemporary business environment. In fact, the process of globalization stimulates companies to expand their business internationally while the competition tends to grow under the impact of globalization in domestic market as well because foreign companies enter Australian market increasing the competition. As a result, today, the strategy of the international market expansion is rather the matter of survival of Coles Australian in a long-run perspective, than the matter of a mere profit or rise of its market value.
Problems Coles faces while establishing business in India

a. Current trade and fiscal policies

On analysing the current position of Coles Australia and the current trade, it is important to place emphasis on the fact that trade factors contribute to the international market expansion being conducted by Coles Australia. What is meant here is the fact that the contemporary business environment is favourable for the development of international trade because the government supports the elimination of fiscal barriers that stimulates international trade, whereas the involvement of Australia in international free trade agreements and organizations stimulates even deeper integration of Australia in the world economy and free trade. In such a context, Coles Australia can benefit from the elimination of fiscal barriers and close economic cooperation with other countries. At any rate, the emergence of free trade opens better prospects for the company to expand its business internationally.

b. Marketing environment

The marketing strategy of the company focuses on the development of its business internationally. At the moment, the company has a strong position in Australia and views its international market expansion as one of the key elements of its marketing strategy. Therefore, the company needs to develop effective approaches to the implementation of its marketing strategy to reach the desirable goals. At the same time, the development of business stimulates the company to expand its market share and enter new market. In fact, large retailers turn out to be in an advantageous position today because they can provide customers with a balanced quality-price services and products. What is meant here is the fact that the price match the quality of products and services Coles provides for its customers and such retailers are in a better position compared to smaller ones, which cannot always compete with such companies as Coles Australia.

c. Coles organizational structure

The company has a complex structure, which includes a chain of supermarkets located in Australia. At the present moment, the company operates nationwide and attempts to expand its market share in Australian market to prepare its further international market expansion. The headquarters of the company is located in Western Australia but its units located in different parts of the country have certain autonomy. They are united under the brand of Coles and operate to meet strategic goals of the company (Dunning, 1998). At this point, it is worth mentioning the fact that the company attempts to develop the common organizational structure and hierarchy which serves as a model for all supermarkets and units of the company, regardless of their physical location. All units of the company are subordinates to the headquarters but their autonomy allows them to tackle with their current problems at the local level without interference of the board and headquarters. The organizational structure of Coles is stable and the company maintains a stable marketing performance due to its organizational structure, which has proved to be quite effective to allow the company to hold a strong position in the domestic market.

d. Management of Coles

The management of the company focuses on the maintenance of the effective work of its employees. In this regard, the company pays a particular attention to the development of the total quality management strategy, which is one of the major priorities in the development of the company services and products being provided to customers. At the same time, the management of the company depends on the relationships between managers and employees (Khor, 2001). In this regard, it is possible to single out some problems, which emerge at the interpersonal level and at the organizational level. On the one hand, managers and employees often fail to develop positive interpersonal relationships, whereas, on the other hand, the organization fails to maintain the high level of job satisfaction and prevent the personnel turnover. As a result, many employees do part-time jobs whereas the turnover rate is relatively high in Coles.

e. Business environment of the company

The company operates domestically but, at the moment, the company attempts to expand its business internationally focusing its attention on India as one of the major target markets. The company maintains positive organizational performance and attempts to optimize its operations to save costs and to maximize their effectiveness. For this purpose, the company introduces en masse the total quality management, which allows the company to maximize effectiveness of work and increase customer satisfaction due to the high quality and save costs because the high quality decreases the risk of complaints from the part of customers. As a result, the company attracts new customers and lays the foundation for the further business development in both Australia and India.

Coles develops its business focusing on local suppliers that allows the company to save costs on transportation and provide customers with products of the high quality and, what is more, local products basically meet habits and needs of customers (Aleman, 2001). At the same time, the company uses international and domestic suppliers, if their products meet the quality standards established within the company.

At the moment, Coles faces the strong competition from the part of large retailers operating in Australian market, such as Woolworths. At the same time, while entering Indian market the company is likely to face the competition from the part of local supermarkets as well as international chains of supermarkets, which operate in India, such as Spar. On the other hand, it is worth mentioning the fact that the current economic recession has decreased the competition because to accelerate the competitive struggle companies need substantial financial resources, which they do not have enough because of the economic recession.

f. Customer-company relationships

Customers are traditionally of the utmost importance for Coles because the company attempts to attract customers to its products and services en masse. In this regard, the company focuses on the quality of products and services and the customer satisfaction, which is crucial for the customer loyalty to the brand. At the same time, to enter Indian market the company will need substantial resources and an effective, well-planned promotional campaign to attract new customers to the new brand that appears in Indian market.

g. Domestic and international policies

The expansion of Coles’ business internationally may be accelerated by the current policies of Australian and Indian government and the contemporary business environment (Blimling, 2001). In actuality, both countries are interested in foreign direct investments and stimulate the development of free trade. This trend is common because it is a characteristic of the process of globalization which defines the development of the world economy. Therefore, Coles can take the full advantage from the lack of fiscal barriers and protectionist policies conducted by the local government. The elimination of barriers opens better opportunities for the effective international market expansion conducted by Coles.

The global and regional trends are favourable for the development of business in India because Coles will invest into the development of its chain in India, while the local government supports such policies and foreign direct investments. At the same time, Indian economy has a great potential and India is likely to face a substantial economic growth. At any rate, the country has great economic potential taking into consideration its natural and human resources.
Solutions and recommendations

The international market expansion imposes numerous challenges on such companies as Coles Australia because the company has to enter new markets with the totally different culture and traditions as well as socio-economic development, such as India. In such a situation, the company can choose the no cost option to establish its business in India through franchising. In fact, franchising implies that Coles provides its brand, experience and organizational structure to local companies, which can use equipment, brand and equipment of Coles to develop their business in India and pay Coles for using its brand and franchise. This option should start with the choice of companies ready to work with Coles. This stage will take about a month for the company will need to analyse the marketing position and prospects of the target companies. On choosing the target company or companies Coles should start cooperating with them. To meet this goal, the company has to transfer its specialists to help the target company/companies to launch business in India. The training will take place in India and it will take about a month too. After that, the target company/companies will launch their business, develop close relationships with local suppliers and attempt to gain the customer loyalty through the high quality of products and services that meet standards established by Coles Australia.

Alternatively, Coles can use a partnership with a local chain of supermarkets. The company will enter the business using the facilities of local chain of supermarkets, sharing their experience and knowledge as well as investing funds to improve the quality of products and services. In addition, Coles will need to expand its business to India and to share the experience of effective management with the local chain of supermarkets. Basically, the partner-company may not need to use the brand of Coles, but, if this step can improve the market position of the target company, it is possible to conduct rebranding. However, the latter may need substantial funds, whereas positive effects of such a step are not obvious. Therefore, Coles should use the facilities of the company and create a partnership with the local chain of supermarkets to enter Indian market and expand its business successfully with minimal investments.

At first, Coles should choose the partner-company that may take about a month for the analysis and assessment of its marketing position. The next step is creating the partnership signing an agreement that will take about a couple of weeks for negotiations and signing the agreement. Finally, the company should share its experience and develop close relations with the partner-company that may take about half of a year.

The merger or acquisition is another option Coles may choose but this option will need more substantial financial resources. The company should better acquire the target company to get the full control over its facilities, structure, human resources and chain of supermarkets as well as profits after restructuring. The first step is the choice of the target company. The next step is the acquisition. The final step is the restructuring of the new company to create the affiliate company of Coles in India.

Finally, the development of a new chain of supermarkets in India is the most expensive way to enter Indian market. However, the company can count on the full control over its chain in India and benefits from the business in India. The first step is to purchase the land and facilities or to construct facilities for the chain of supermarkets. Second, the company need to define suppliers and sign contracts to supply products to its supermarkets in India. The company has to recruit professionals and transfer managers to India to organize business in this country. Finally, the company can start business after a well-organized promotional campaign.

Conclusion

Thus, taking into account all above mentioned, it is important to lay emphasis on the fact that Coles have good prospects to enter Indian market. However, the company will need to take into consideration existing threats and potential of the market and choose the best option among the aforementioned one to enter Indian market successfully.

References:

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