Essay/Term paper: Corporate structure - colesmyer

Essay, term paper, research paper:  Management

Introduction

Corporate structure is the way in which the parts of a corporation are put together. Corporations usually have several strategic business units (SBUs). These SBUs are also called strategy centers, strategic planning units, or independent business units (Jain, 1990, p.17). Kotler (1997, p.71) states that an SBU is a single business or collection of related businesses that can be planned separately from the rest of the company. An SBU can be a company division, a product line within a division, or sometimes a single product or brand (Kotler et al., 1998, p.35).



A corporation and its SBUs have structures that must be understood before a marketing plan can be created. These are very important because a marketing plan is a significant key to achieve the organisational goals. A good description of the corporation and its SBUs will provide an adequate understanding about them. This essay will describe the structures of a corporation and one of its SBUs, namely Coles Myer Limited and Coles.



Corporate Structure

Coles Myer Limited is an Australia company which provides services for its customers.

History

Coles Myer Ltd. is an Australia's retailer. It is a merge of two large retailers, namely G.J. Coles & Coy. Ltd. and The Myer Emporium Ltd. G.J. Coles & Coy. Ltd. started its first store in Collingwood, Melbourne on 9 April 1914; while The Myer Emporium was established in 1900 in Bendigo, Victoria, by Sidney Myer. G.J. Coles operated variety stores; Myer operated department stores, as well as discount and specialty stores. The two companies united in 1985 and became Coles Myer Ltd. with a new company logo.



Shareholders

Coles Myer Ltd. has over 300,000 shareholders. It has about 33,000 employee shareholders. These employees are part-owners of Coles Myer Ltd. through the Employee Share Plan. There are also some shareholders who invest indirectly in the company through managed investments such as superannuation and trust funds. The substantial shareholders are shown in the table below.



Substantial Shareholders as at 30 September 1998

Number of Shares

1 S.L. Nominees Pty Ltd and its associates 141,352,959

2 The Capital Group of Companies, Inc. and its associates 86,090,011

3 Barclay Investments Pty Ltd and its associates 72,485,198

4 Macquarie Bank Ltd and its associates 85,660,000

5 Permanent Trustee Co. Ltd and its associates 70,021,605

Source: www.colesmyer.com.au/invest_info/98_annual_review/35.html



Mission

Coles Myer Ltd. has a mission to be the best retailer in every market in which it operates. It wants to produce benefits to its stakeholders. It also wants to be known for honesty and leadership. For this purpose, it considers communication as a very important aspect. It needs to have an open and responsive communication with every aspect of the environment to achieve its goals.

Strategic Business Units

As it is explained before, an SBU could be a company division, a product line within a division, or a single product or brand. In Coles Myer Ltd., the SBUs are the company divisions. Coles Myer Ltd. operates twelve SBUs in order to achieve its organisational goals. The SBUs are:

· Coles

Coles is a full service supermarket. It provides food and liquor. There are about 407 stores across Australia. It employs more than 52,000 people.

· Bi-Lo

Bi-Lo is also a supermarket that provides food and liquor. It is known for its tradition of discount grocery retailing. There are about 149 Bi-Lo stores across Australia.

· Myer Grace Bros

Myer Grace Bros (MGB) provides shopping places which change overtime in order to fulfill the expectations of the customers. It has about 69 stores in Australia.

· Myer Direct

Myer Direct is an Australia's leading mail order business. It was established in 1989 and has been growing rapidly since then.

· Kmart

Kmart offers general merchandise with very competitive prices. It provides the convenience of self-service and front-end register. It has about 163 stores across Australia and New Zealand.





· Target

Target is a discount department retailer. It offers a merchandise range of softgoods, dress fabrics, manchester and furniture. There are about 126 Target stores now in Australia.

· Fosseys

Fosseys integrated with Target in 1996. It provides a family apparel and homewares merchandise. It usually focuses on rural areas. It has about 144 stores in Australia.

· Liquorland

Liquorland is a liquor retailer. It operates four brands, namely Liquorland, Vintage Cellars, Quaffers, and Liquorland Direct. Currently it operates about 410 stores Australia-wide.

· Red Rooster

Red Rooster is an Australian-owned fast-food restaurant. It has about 272 stores throughout Australia.

· Katies

Katies is a ladieswear specialty store. It operates about 228 stores throughout Australia and New Zealand.

· Officeworks

Officeworks provides general merchandise for small businesses, home office, and students. Officeworks has about 28 stores in Australia.

· South Cape

South Cape is a direct mail business which was launched in 1996. It provides clothing for men and women.

Operating Areas

Until now, Coles Myer Ltd. operates more than 1990 stores in two countries, namely Australia and New Zealand. Although it operates only in those two countries, it is also listed in the stock exchanges in London and New York.



Sales

Coles Myer Ltd. had annual sales of over $20,500 million in 1998. It spent over $19,500 million for merchandise and services. The annual profit before interest and tax in 1998 was $674.5 million. These numbers are higher than before. The table below shows the numbers in the last 5 years.



1998 1997 1996 1995 1994

$M $M $M $M $M

Total Group Sales 20,587.6 19,224.8 18,175.0 16,801.6 15,921.4

Expenses excl. depreciation and amortisation 19,501.4 18,225.1 17,242.5 15,773.7 14,935.9

Earnings Before Interest and Tax (EBIT) 674.5 615.3 578.4 729.9 671.9

Source: www.colesmyer.com.au/invest_info/6.html



The sales growth for the last 5 years is shown in the table below.

Sales Growth 1998 1997 1996 1995 1994

No. of weeks 52 52 52 52 53

Actual 7.1% 5.8% 8.2% 5.5% 5.0%

Actual-equivalent weeks 7.1% 5.8% 8.2% 7.4% 3.2%

Source: www.colesmyer.com.au/invest_info/6.html

Employees

Currently Coles Myer Ltd. employs more than 150,000 employees across Australia and New Zealand. This includes the National Office staff in Melbourne, Victoria. The table below shows the allocation of the employees in both countries.



Number of Employees

NSW/ACT VIC QLD SA/NT WA TAS NZ Total

41,625 50,239 27,245 12,855 18,324 2,456 2,085 154,829

Source: www.colesmyer.com.au/invest_info/98_annual_review/23.html



Assets

The value of gross assets owned by Coles Myer Ltd. is $7,172.5 million. Most of the assets, exactly 34.7%, are allocated in "food and liquor" SBUs. "General merchandise" SBUs have 17.3% of the total assets. Myer Grace Bros has 17.1% of the assets; "apparel and home" SBUs have 12%; and the rest of the assets is property or unallocated.



Dividends

In 1998, Coles Myer Ltd. gave out dividends of $237.3 million, which is 1.2% of the sales revenue, and about 35.2% of the earnings before profit and tax. The ordinary share price (closing) of the company was $6.36 in 1998. The current share price is shown in the table below.







Current Share Price

Open ($) High ($) Low ($) Last ($) Cumulative volume ($) Cumulative value ($)

Coles Myer Ltd. (CML) 9.095 9.095 8.940 8.990 913,739 8,217,757.18

Source: www.colesmyer.com.au/invest_info/98_annual_review/8.html



Strategic Business Unit

The strategic business unit (SBU) of Coles Myer Ltd. that will be explained is Coles Supermarket.

Size of SBU

Coles Supermarket currently employs more than 52,000 people and it has about 407 stores in Australia. It does not have any store in New Zealand. The number of stores in each state is shown in the table below.



Number of Stores

NSW/ACT VIC QLD SA/NT WA TAS NZ Total

111 99 80 39 64 14 - 407

Source: www.colesmyer.com.au/invest_info/98_annual_review/23.html



Mission

Coles Supermarket has a mission or a reason for its existence. The mission statement identifies what it stands for and what it wants to achieve (www.coles.com.au). The mission is "we are innovative industry leaders, who provide customers with value, convenience and superior service" (www.coles.com.au). This mission statement applies to all of the stores owned by Coles Supermarket.



Sales

The annual sales in 1998 for Coles Supermarket was about $3,000 million. It is not an exact number, but an assumption based on the 1998 sales for category "food & liquor" (this category includes 4 SBUs, so the sales is divided by 4). The EBIT (Earnings Before Interest and Tax) of Coles Supermarket in 1998 was about $102 million. This is also an assumption, which is based on the EBIT margin for "food & liquor" category (3.4%).



Business Philosophy

A business philosophy is a guide to do marketing efforts (Kotler, 1997, p.17). It is perceived that Coles Supermarket's business philosophy is societal marketing philosophy. Coles Supermarket focuses on customer needs and wants. It can be seen clearly from the mission statement and the slogan in the logo, that is "serving you better". However, it also does activities that show it cares about the environment, which currently is the society best interest. For instance, Coles has provided $150,000 to help the WRAP (Waste Reduction Accreditation Program) campaign and it also will be the first retailer to run the program in its entire stores. Its activities also include recycling, using energy efficiently, and providing green products.







Target Markets

Target markets are the market segments in which a company will sell its products. Coles Supermarket has various target markets, because it provides service of selling food and personal, household or domestic products. Generally, everyone can be the target market. However, it seems that Coles' target markets are young people and old people, but children are not really the target markets.



Product Range

Product range is the extent to which products of a company vary. Coles provides services of selling products for its customers. The product range is quite wide. The products vary from food to electricity equipment. It sells food, pet food, cleaning stuff, magazines, stationery, cards, batteries, electricity equipment, and many other things. The products are mainly categorized in personal, domestic, or household products. However, more than 85% of Coles' products are Australian-made products. The price of the same products may vary in different stores. It depends on the season, availability, store location, and competition with other stores.



Major Competitor

Currently Coles' major competitor is Safeway Supermarket from Woolworths group. Safeway's sales in 1998 was about $4,800 million (this number is assumed based on the sales of supermarkets group of Woolworths). The EBIT in 1998 was about $170 (this number is assumed based on the EBIT of supermarkets groups of Woolworths). The EBIT was 3.56% of the sales. Safeway has share of national food spend of about 20%, while Coles has the share of about 17% (www.woolworths.com.au). Compare to Safeway, Coles has lower sales value, but higher EBIT. It means that Coles is more efficient and effective in allocating its expenses.



Conclusion

Coles Myer Ltd. is a big corporation that provides services for its customers. Its goal is to be the best retailer in the markets. To achieve the goal, it has twelve SBUs in some categories. One of its SBUs is Coles Supermarket. It sells personal, domestic, or household products. By understanding the structure of the corporation, what the corporation needs can be seen and the marketing plan can be created.



























Bibliography





Boyd, H.W. & Walker, O.C. (1990), Marketing Management: A Strategic Approach, Richard D. Irwin, Inc., Boston.



Coles Myer Ltd., Coles Myer Limited, <http://www.colesmyer.com.au>, (Accessed <23 August 1999>).



Coles Supermarket, Coles Supermarket, <http://www.coles.com.au>, (Accessed <23 August 1999>).



Diamond J. & Pintel, G. (1991), Principles of Marketing, (4th edn), Prentice Hall International, Inc., New Jersey.



Kotler P. & Armstrong G. (1999), Principles of Marketing, (8th edn), Prentice Hall International, Inc., New Jersey.



Kotler P., et al. (1998), Marketing, (4th edn), Prentice Hall Australia Pty Ltd., Sydney.