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Cooperative Food Business


Executive Summary

The purpose of this report is to conduct an analysis for Cooperative Food Business and compile strategic options for future development. This report analyzes the general external environment and concluded that both of the degree of complexity and predictability in retailing industry is high. Then it followed by analysis of the future macro environment using the PESTLE. Factors such as tax policy, inflation rate and multicultural nature of the population may affect the future development of the whole industry. Then the report focused on industry and used Porter’s five forces framework. The competition among retailers is furious. Since the five forces framework did not provide information with specific competitors, the report adopted Strategic Group analysis and Market Segmentation for competitor analysis.


The internal analysis began with resource audit analysis and distinguished the resources between threshold and unique resources. Then a value chain analysis was provided. As a result, cooperative values and diversified businesswere considered as the organisation’s core competences. Then SWOT analysis provided a concise summary of key factors arising out of the analysis performed. Possible suggestions are given based on the SWOT analysis.


Based on this report, it recommended the Cooperative Food Business should establish the online store considering the changing purchase pattern. It can create a new channel for shopping which is not limited by time and geography. It also can provide a more comfortable environment for shopping.


Table of Contents

Executive Summary. 2

1.      Introduction. 4

2.      External Environment Analysis. 5

2.1. Basic Environment Conditions. 5

2.1.1. Changeability. 5

2.1.2. Predictability. 5

2.2. PESTLE Analysis. 6

2.2.1. Political Factors. 6

2.2.2. Economical Factors. 6

2.2.3. Social Factors. 6

2.2.4. Technical Factors. 7

2.2.5. Legal Factors. 7

2.2.6. Environmental Factors. 7

2.3. Industry Environment Analysis. 7

2.3.1. Threat of New Competition. 7

2.3.2. Threat of Substitute Products or Services. 7

2.3.3. Bargaining Power of Buyers. 8

2.3.4. Bargaining Power of Suppliers. 8

2.3.5. Intensity of Competitive Rivalry. 8

2.4. Competitor Analysis. 8

2.4.1. Strategic Group Analysis. 8

2.4.2. Market Segmentation. 9

3. Internal Environment Analysis. 9

3.1. Resource Audit Analysis. 9

3.2. Value Chain Analysis. 9

3.3. Core Competences Analysis. 10

3.4. Key Stakeholders Analysis. 10

4. SWOT Analysis. 10

4.1. Strength. 10

4.2. Weakness. 10

4.3. Opportunity. 11

4.4. Threat11

5.      Possible Strategic Options and Evaluation. 11

5.1. Strategic Option 1: Positioning. 11

5.2. Strategic Option 2: Establish Online Store. 11

5.3. Strategic Option 3: innovation. 12

5.4. Evaluation of the Options. 12

6. Critical Review on Models and Techniques Used. 13

7.      Conclusion and Final Recommendations. 14

References. 16



1.  Introduction

The Cooperative Group was founded in 1844 and operated a diverse business including food, financial service and so on. The biggest characteristic of the Cooperative Group is that the ownership of the company goes to 5.5 million consumer members instead of shareholders. As a result, the Cooperative Group adopts cooperative values and principles such as self-help, democracy and so on.


According to the annual report of 2010, the Cooperative Group comprises a diverse range of business including food, financial services, pharmacy and so on. Among these different kinds of business, food retail is the biggest part and accounts for nearly 60% of the total revenue. Now, it is the fifth largest food retailer followed by Tesco, Sainsbury, Asda and Morrisons in the United Kingdoms. With an attention on convenience, community and service, the Coop also won the Green Retailer Award for three times.


Even though the Cooperative Food Business has been a success in these years, there are still potential risks which may hurt its future development. For example, both Somerfield and Coop were underperforming after the Somerfield acquisition. Even though the Coop adopted strategies such as “Good with Food” promotion, there are only 30% of the customers felt “vary satisfied” in 2009. Thus, good strategic options are needed.


In the following part of report, it is going to analyze the external environment factors that the Coop may face. A variety of models such as PESTLE, SWOT and Five Forces are very useful for planning the strategies to the Cooperative Food Business and possible strategies will be also taken into a look for the Cooperative Group. After evaluating these strategies, recommendations will be given.