Business Strategy

Posted on August 4, 2021 by Cheapest Assignment

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Introduction:

A strong applicable business strategy assists an organization to establish a direction for them, which helps, in making wise business decisions (Matt, Hess and Benlian, 2015). The report will focus on five primary business strategy developments tool available and adopted in the industry and explain how they are implemented in their corresponding fields. After that, five strategies have been chosen for organizations, which are SWOT, PESTEL, Porters Five Forces, Ansoff Matrix and Porter’s Generic Strategy. The application of these tools will allow the organizations to gain supremacy in the competitive market.

Discussion

The following section will focus on explaining each tool of market strategy and its merits and demerits. The application of those tools to similar companies will depict the understanding of the organization of that tool.

TOOL 1: SWOT analysis

The chosen theory for analysis is SWOT.  Refer to Appendix 1

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Theory Review

The theory imposes some significant benefits for the organization such as it is an extremely low on cost tool and anyone who has a vast knowledge of an organization can perform a SWOT analysis. The analysis concentrates on the most critical aspects of the business, which can affect it as it addresses the weakness of the organizations upon which the organization can improve and capitalize on the opportunity quadrant (Jiang et al. 2018). However, a SWOT analysis cannot describe a detailed explanation of complexed scenarios such as it can only describe those options, which properly falls into strengths or weakness but is not able to address a two-side factor where one point can be both weakness and strength.

Application of Tool

Woolworths Limited has been chosen as the company upon which SWOT analysis will be done as depicted below:

Strengths	Weakness
One of the oldest and high brand value retail market chains in Australia Highly committed towards sustainability and the environment A vast number of products and service Diverse workforce	A late entry into the online retail market Government restriction on high pricing the products in collaboration with COLES
Opportunities	Threats
Promising massive growth in the retail sector Usage of social media for engaging consumers Better promotion opportunities to get back the top spot in the market	Aldi’s aggressive expansion Australian online retail growing slowly Loss of customers in FY14

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TOOL 2: PESTEL analysis

The chosen theory for analysis is PESTEL. Refer to Appendix 2

Theory Review

PESTEL analysis provides a very easy-to-use framework to understand the situation better. It involves cross-functional expertise to chalk out the external environment and assists the management in reducing the impact of possible threats in the existing environment as well as in a new one in case of expanding the business. On the contrary, the analysis is not applicable in the long term as the variables might change in the marketplace(Salar and Salar, 2014).

Application of Tool

Spark Furniture has been chosen as the company upon which PESTEL analysis will be done as depicted below:

Political	Economic
Increase in a VAT of 20% forcing the brand to cut down the prices, making less profit Change in Labour Policy	A rise in the interest rate due to inflation might affect the supply chain The organization has sold at the lowest price possible to avoid uncertain situations due to having a loan from the government of £150,000.00
Social	Technological
Population Growth Global warming Cultural norms affected effective labour agreement caused labour strike	New types of equipment usage have increased productivity to meet consumers need The application of online shopping helped to reach consumers
Legal	Environmental
Changes in labour law may affect the organization Changes in product standard law can affect the cost	Focusing on furniture reusability Adoption of Environmental disposal green transport Recycling of unusable products

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TOOL 3: Porte’s five forces

The chosen theory for analysis is Porte’s five forces. Refer to Appendix 3

Theory Review

Porter’s five forces signify the primary five variables which describe the competition in the industry and understanding these five factors can help an organization to take a careful measurement and take competitive advantages as well. However, the theory only provides a snapshot of the current market situation, which needs to be continuously updated. Avoiding this factor will lead to the data being obsolete as the market in the contemporary era is highly fluctuating, and very few factors are now remaining static.

Application of Tool

Bosch Australia Limited has been chosen as the company upon which Porter’s five forces analysis will be done as depicted below

This analysis is considering the five factors as mentioned below:

Supplier power of Bosch Suppliers:

• Usage of more than 500 suppliers makes all of them effectively expendables
• Physical products manufactured in third world country gives less leverage to bargain

Competitive rivalry facing Bosch:

• A considerable amount of competition from Hitachi and KitchenAid
• A diverse product portfolio assist the organization to stay ached in the competition

The threat of new entrance of Bosch:

• The low threat for new market entry as the industry is saturated and dominated by wealthy organizations

The threat of substitution of Bosch:

• Low threat of substitution because of the diverse business portfolio which operates in home appliances and car components

Buyer power of Bosch:

• Less ability for consumers to bargain as they have to use some appliance based services
• Competition in the current market provides consumers with bargaining the price with different companies

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TOOL 4: Ansoff Matrix

The chosen theory for analysis is the Ansoff Matrix. Refer to Appendix 4

Theory Review

Ansoff matrix forces the business planners to measure the expected risks involved in a particular direction and lays out possible growth strategies. These strategies assist the organization to build its aims and objectives to be presented to the stakeholders.

However, the theory fails to suggest the changes required in a diverse strategy because this is only a theoretical model. Ansoff matrix does not take into account the external competitors because of which, accurate predictions are missing from the theory.

Application of Tool

Coca-cola has been chosen as the company upon which Ansoff matrix analysis will be done as depicted below

• Market penetration: This includes an attempt to increase the market share within the existing marketplace by selling a new product to the consumers or finding new consumers which Coca-cola has done with the help of the promotion element of the marketing mix
• Product development: This part involves creating a new product to meet the need of the consumers of the existing marketplace such as the new products introduced by Coca-cola over the years
• Market Development: This stage includes developing a new group of buyers to sell an existing product. An example would be the release of Cock Zero in 2005. The product was the same as Diet Coke(Teigeler and Hahne,2014). The product was a favourite amongst women, and with the new name and advertising campaign, Coca-cola has successfully made a masculine appeal of the brand
• Diversification: This includes the introduction of a new category product in the existing portfolio which Coca-cola has done over the years

 

TOOL 5: Porter’s Generic Strategies:

The chosen theory for analysis is Porter’s Generic Strategies. Refer to Appendix 5

Theory Review

The strategies focus on cost leadership using which the organizations can minimize the expenditure and will have a margin between which they can set the price to get a competitive advantage in case of a price war. Even if there is not price fight for the time being in the market, the company can keep the price and average profit high to get sustainability.

Application of Tool

Jet2 Holidays has been chosen as the company has applied the theory and made a profit out of it. As the theory suggests, the company has deduced any unnecessary cost associated with production. No managers are allowed to travel only in business class rather than the company is affording an economy class, as the extra expenditure is not adding up any value for the brand. The company has also focused on the design of the product, which is very much personalized to meet the needs of the consumer. The above two applications have provided sustainability to the company by maximizing the average profit margin.

Conclusion

From this essay, it can quickly be concluded that business strategies have vital importance to build the vision and mission of the organization as well as avoiding risk to make it a sustainable organization. The main four strategies, which have been discussed in the report, depict versatility and covers the entire aspect of industrial strategies. The application of these four strategies in the organization from different industries depicts the various benefits and demerits of the theories.

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References:

Darroch, J., 2014. Ansoff’s Growth Matrix—In Detail. In Why Marketing to Women Doesn’t Work (pp. 131-147). Palgrave Macmillan, London.

Jiang, R., Mao, C., Hou, L., Wu, C. and Tan, J., 2018. A SWOT analysis for promoting off-site construction under the backdrop of China’s new urbanisation. Journal of Cleaner Production, 173, pp.225-234.

Matt, C., Hess, T. and Benlian, A., 2015.Digital transformation strategies. Business & Information Systems Engineering, 57(5), pp.339-343.

Rothaermel, F.T., 2015. Strategic management.McGraw-Hill Education.

Salar, M. and Salar, O., 2014. Determining the pros and cons of franchising by using swot analysis. Procedia-Social and Behavioral Sciences, 122, pp.515-519.

Tansey, P., Spillane, J.P. and Meng, X., 2014. Linking response strategies adopted by construction firms during the 2007 economic recession to Porter’s generic strategies. Construction management and economics, 32(7-8), pp.705-724.

Teigeler, J. and Hahne, A.K., 2014. Market Analysis of Red Bull based on the countries Germany, Switzerland and Austria.

Vaiarelli, A., Cimadomo, D., Trabucco, E., Vallefuoco, R., Buffo, L., Dusi, L., Fiorini, F., Barnocchi, N., Bulletti, F.M., Rienzi, L. and Ubaldi, F.M., 2018. Double stimulation in the same ovarian cycle (DuoStim) to maximize the number of oocytes retrieved from poor prognosis patients: a multicentre experience and SWOT analysis. Frontiers in Endocrinology, 9, p.317.

Appendix

Appendix 1:

SWOT analysis: SWOT analysis takes place when an organization looks into the company’s internal issues to rectify those and make the most out of the opportunities. The four quadrants of this analysis evaluate the Strengths, Weaknesses, Opportunities, and Threats of the organization.

Figure: SWOT analysis

Source: (Vaiarelli et al. 2018)

Appendix 2:

PESTEL analysis: PESTEL analysis gives an organization a bird’s eye view of a particular environment where the organization is situated or trying to expand. The expanded form of PESTEL denotes P as Political, E as Economic, S for Social, T for Technological, L for Legal and E for Environmental factors. Thus, it can be said that this analysis covers the six critical external aspects that can affect an organization.

Appendix 3:

Porter’s Five Forces: Porter’s five forces are used to analyze the industry structure, and the corporate strategy of an organization is needed to be evaluated. The five forces are used to calculate the competitive intensity and profitability. The five factors are competition in the industry, the potential of the new entrance in the industry, powers of suppliers, customer power and the threat of substitute products.

Figure: Porter’s Five Forces

Sources: (Rothaermel, 2015)

Appendix 4:

Ansoff matrix: Ansoff matrix suggests whether a business should grow depending on the same product in a new market or new products in the same market. This matrix suggests different growth strategies to choose from to grow. Each strategy suggests different directions for the organization such as Market penetration, Market development, Product development, and Diversification.

Figure: Ansoff matrix

Source: (Darroch, 2014)

Appendix 5:

Porter’s Generic strategies: Michael Porter developed a set of three strategies that a company could use to get competitive advantages. The three strategies are cost leadership, differentiation and focus. The theory suggests keeping the price of the product the same while minimizing the production cost from every segment of a company. After that, the profit margin will get high which will provide sustainability to the company in case of a price war. Differentiation strategy suggests that an organization should have a varied list of product portfolios to address the need of the consumers. Focus strategy depicts concentrating on a narrow segment of the targeted market and fulfilling their needs and survive by focusing on that entirely.

Figure: Porter’s Generic Strategy

Source: (Tansey, Spillane and Meng, 2014)

 

 

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