HI6006Competitive Strategy Assignment Help
Key Strategy Development Tools
Students are required to write a Comprehensive discussion of any three of the strategy models, with practical application to current business examples.
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Introduction
Strategy planning is defined as the process of developing a direction or strategy and an action plan for achieving organisational goals. An organisation is required to take into consideration key elements which include understanding of mission, vision and values. Mission, vision and values serves as a base for the process of strategic planning. An organisation would possess well defined mission and vision statements and lay their emphasis towards organisational values for business context. Values are shared belief sets which determine organisational culture and vision statements are future aligned and tend to explain ideal or desired state of an organisation. This report will shed its light on accessing common tools such as SWOT, PESTEL and Porter's Five Forces for strategic planning for analysing external as well as internal factors which influence strategic decisions taken by an organisation.
SWOT Analysis
SWOT Analysis is referred to as a technique for evaluating competition risk, performance, business potential and part of business which includes product division or line, entity or an industry. As opined by Valentin (2001), by using external and internal data, an organisation will be able to implement strategies which are most likely to attain success and discard ones which are not effective. An analyst conducting a SWOT analysis will be able to provide effective guidance what strengths and weakness lies within the industry.
Strengths explains the areas where an organisation excels and separates them from their rival companies, loyal customer base, loyal brand, unique technology and a strong balance sheet. For instance, a hedge fund which might have established a proprietary strategy for attaining best results. The organisation is then needed to decide how those results could be used for attracting new investors.
Weakness hinders optimum performance level of an organisation. In accordance to Valentin (2001), for a company, weaknesses are the areas which are needed to be addressed for remaining competitive within the market.
Opportunities are referred as favourable external factors which might be utilised by an organisation for gaining a competitive edge over its competitors (Johnson & Peppas, 2003). For instance, if tariff cuts are done by a country, it allows a car manufacturer to export their cars into a new market for enhancing its sales rate and share in the market.
Threats are the factors which could pose potential harm towards an organisation. For instance, floods could be a major threat for a wheat producing company as it might potentially reduce or destroy crop yield.
Example:
In 2015, the Coca Cola Company conducted a value line SWOT analysis for identifying its potential strengths such as global brand name, vast network for distribution and opportunities provided for them in emerging markets (). Whereas, they noted weakness and threats such as growing interest of public towards healthy beverages, fluctuations in value of foreign currencies and competition from companies offering healthy beverages.
PESTLE Analysis
PESTLE is an acronym for Political, Economic, Social, Legal, Environmental and Technological. As opined by Srdjevic, Bajcetic & Srdjevic (2012), PESTLE is a strategic planning tool which enables an organisation to determine external factors influencing their business operations and enable them to gain an edge over its competition. This tool looks into factors in a marketplace or nation and its impacts on its customers. Coca Cola is a global manufacturer of soft drinks and a range of products are offered by them. A PESTLE analysis for the company is discussed as follows:
Political Factors includes changes in legislations and government policy which might impact overall economy such as employment laws and tax (Banerjee, 2005). The Coca-Cola Company is needed to amend to FDA rules for offering its customers with appropriate beverages.
Economic factors such as exchange rates, inflation, recessions, demand and supply are included in this category. Coca-Cola Company is aware of tastes and preferences of consumers and generates most of its revenues from soft drinks.
Social Factors includes demographics, lifestyle and culture of a consumer. The company has recently launched healthy soft drinks within the United States and is planning to expand its market in China and Japan.
Technological Factors are the factors like technological changes and how technology is used in different industries, sectors and research. Coca-Cola has been using advanced technologies for developing fine products for a shorter span of time.
Legal Factors comprises of factors like copyright law, consumer law as well as health and safety law which might pose a major impact towards business.
Environmental Factors does not link directly to actual business including pollution, weather, climate, and laws related to environment.
By conducting a PESTLE analysis, marketing managers and financial experts of Coca-Cola is able to identify external factors while making business related decisions (Srdjevic, Bajcetic & Srdjevic, 2012). Hence, a manager is required to lay importance to social aspects of consumers like culture, demographics and purchasing patterns. In accordance to Banerjee (2005), the outcomes of PESTLE analysis enables an organisation to make certain choices. These outcomes are much useful for an organisation when making certain decisions like changing business structure, presenting the brand image and developing new products.
Porter's Five Forces
Porter's Five Forces is a strategic analysis tool which evaluates the critical factors which influence the level of competition faced by the industry. As highlighted by Rice (2010), strategies are formed by managers on the basis of this analysis for enhancing overall organisational profitability. Coca-Cola is one of the leading beverage industries in the world and Pepsi is one of its major competitors.
Supplier's bargaining powers
The suppliers of Coca-Cola have weak bargaining power due to the presence of higher number of suppliers and its lower switching costs. While, Coca Cola is able to switch easily from one supplier to another, it is not feasible for the suppliers to switch easily from the company (Dobbs, 2012). This might result into loss of potential suppliers.
Customer's bargaining powers
The individual bargaining powers for customers of Coca-Cola are significantly low and they tend to purchase products in lesser volumes and are not focused for specific markets. However, differentiation level between Coca-Cola and Pepsi is low as similar products are offered by them.
Threats of New Entrants
In case of beverages industry, there exists a range of factors which does not allow new brands to enter and grow within a market. As influenced by Rice (2010), Coca Cola are needed to make significant monetary investments in their product manufacturing operations to marketing. For small brands to compete with Coca-Cola, they are needed to carry out a mammoth task for building a successful brand.
Threat of Substitutes
The substitutes of products offered by Coca-Cola are supplied mainly by fruit juices, and Pepsi. There are high numbers of substitutes available for products of Coca-Cola and switching costs for customers are also low.
Competition
Coca-Cola and Pepsi are two major players in the beverage industry and intense rivalry exists between them. Hence Coca-Cola is needed to supply products to provide value to their customers and gain a competitive advantage within the market.
Conclusion
From assessment of this report, it can be stated that strategic planning tools like SWOT, PESTLE and Porter's Five Forces plays a key role in implementing specific decisions for business. By conducting a SWOT analysis, an organisation will be able to understand the strengths and weaknesses existing and will be able to perform an informed selection from available strategic alternatives. PESTLE analysis is an analytical tool which accesses the factors which might impact competitive standing of an organisation. By conducting a PESTLE analysis, marketing managers and financial experts of an organisation are able to identify external factors while making business related decisions On the other hand, Porter's Five Forces uncovers supplier power, new entrants to the industry, competition, buyer power, as well as threats of substitute goods and services which enables an organisation to plan their strategies for thriving and expanding within the market.
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