Competitive Advantage

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Contents Page

Cooperative Group – Current Position2
Resource Analysis2
Value Chain4
SWOT Analysis7
Examining External Influences (PESTEL)12
Porters Five Forces14
Maintaining Competitive Advantage15
Action Plan16
Bibliography18

APPENDICIES

SWOT AnalysisAppendix A
Porters Five ForcesAppendix B
PESTEL AnalysisAppendix C
Value ChainAppendix D
Fair TradeAppendix E
Freedom FoodAppendix F

Developing Competitive Advantage

The Co-operative Group – Current position

The Co-operative Group (the company) is a retail and financial group of companies which includes amongst others; Cooperative Food; Cooperative Travel; Cooperative Funeral care; Cooperative Bank; Smile; Cooperative Motor Group; Cooperative Pharmacy; Cooperative Insurance. The Cooperative Group is a unique family of businesses run by over five an a half million members. The Group had sales over £13.7 billion in 2009, and employs 120,000 staff serving approximately 21 million customers per week in over 4800 high street branches and through online shopping. (Cooperative Group, 2011)

The company was established in 1844 by a cooperative group of businessmen selling food items that would not otherwise have been affordable, that included the distribution of shares of profits according to purchases made. This became known as “the divi”, or dividend, the first loyalty scheme of its kind. Dividend stamps were introduced in 1965, and remained in operation until the late 1970’s. The 'divi' was resurrected in 2004 as a membership scheme, once again offering a share of the company’s profits to members. (Guardian, 2004)

Resource Analysis

Cooperative Food operates within a highly competitive market, and is currently the fifth largest operator within the United Kingdom holding a 6.7% market share. This position compares with: (Data from Kantar 2010)

Other competitors operate within the grocery market; however, their market share is negligible. Cooperative Food, with their strong position within the high street/convenience arena has limited competition from: Costcutter; One-Stop; and Londis. There is a threat from Tesco’s, and Sainsbury’s entering this sector through an increase in their Metro and Local stores. In addition ASDA have recently (2010) taken over the Netto chain.

The Value Chain and the Value System
The Value Chain, in relation to Competitive Advantage is outlined in Porters ‘Competitive Advantage’. Porter states that the value chain is “A systematic way of examining all the activities a firm performs and how they interact is necessary for analyzing the sources of competitive advantage.” He goes on to say that “The value chain disaggregates a firm into its strategically relevant activities in order to understand the behaviour of costs and the existing and potential sources of differentiation. A firm gains competitive advantage by performing these strategically important activities more cheaply or better than its competitors. (Porter, 1985: 33) Therefore for an organisation to remain competitive within the market, it must ensure that there is added value that is value that has a positive effect on its customers compared with the value attributed to its competitors. Porter suggests that activities can be divided into Primary Activities, subdivided into five distinct categories, and Support Activities, again divided into four activities. (ANNEX D) Primary activities are those which directly relate to the core tasks of moving merchandise from its source through the stores, and ultimately into profit margins. Support activities relate to those functions of the organization which support core activities. Primary Activities

Inbound Logistics
The Cooperative Group is the largest farmer within the United Kingdom with approximately 5000 acres. The company grows its own produce including; potatoes; strawberries;...
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