HI6006 Competitive Strategy Assignment Sample
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In the competitive business industry, the management of an organization needs to focus on different business models and theories, for example PESTEL, SWOT, Generic and 5F analysis for developing sustainable position.
PESTEL analysis
The external business environment or Macro environment can be summarised by this model that includes six significant factors such as follows:
Political
The business operations require proper licence from different department of the government to maintain work. The political parties can create a deep impact on the proficiency of an organization. The management needs to consider this factor that concludes guidelines of different political parties for making significant decisions (Kolter, 2015). In other words, the leaders should follow governmental policies and regulations introduced to avoid any legal hazards.
Economic
These factors play a very essential role as it includes few significant aspects of a host country, for example, GDP, exchange rate and currency value. The management of an organization needs to focus on these factors to increase the market share and profit margin. In most of the cases, the organization can earn more profit in those countries that have high currency value and exchange rate. Moreover, the management can also control the stoke market with high economic stability thereby augmenting the economic situation.
Socio-cultural
It is one of the significant aspects of this model as it includes purchasing behaviour of the customers. The management of an organization needs to focus on the social factor for accurate recognition of the customer’s requirements. Besides that, the cultural issues could be resolved among employees with the help of socio-cultural factor.Moreover, demands of individuals from different communities can be identified by this factor and it can be introduced within the product lines (Ng, 2014). Thus, it can improve sales and profit margin.
Technological
The business operations of a firm is highly influenced by the technological factor of this model. The management of an organization needs to adopt latest technology for expanding the business operations across the international context. With the help of technological revolution, the operation planning of an organization can be improved, for example live tracking and chatting. The role of the internet is extremely noteworthy for the technological development of any business since it increases product and brand awareness.
Environmental
The management of a business firm needs to focus on the environment pollutions and global warming as well by applying wastage management plan. The rate of pollution can be reduced by recycle process of wastage management of a business firm. It is responsibility of a business sector to preserve the natural resources and reduce the pollution rate for environmental sustainability.
Legal
The legal factor covers mandatory laws of a host country where an organization operates its business operations. The management needs to follow law and order system of a country to avoid certain legal hazards. Moreover, agreement and legal contracts should be considered by the management of a business firm as a critical aspect of the legal factor(Griffin, 2013).
Porter’s five force theory
The competitive business context includes different threats for an organization. This business model incudes five different forces that would help an association to recognise business threats.
Bargaining power of customers
The customers are main stakeholder of an organization that increases the annual profitability. The management of an organization needs to identify the requirements of the customers to control the negotiation process. Low price strategy could be a useful method to control the bargaining power of the customers (Day, 2014).
Bargaining power of suppliers
The suppliers generally argue for high costs of raw material supply with the management of a business firm. The management needs to make proper relation with other suppliers in the market to control the bargaining power of the suppliers. However, effective negotiation can reduce the demands of the suppliers which should be applied by the manager of an organization.
Threats of new entrants
In the market, new companies are starting their career at regular basis. New firms could be a serious threat for an organization in the cut-throat business world. The entrepreneurs are one kind of new entrants in the market which can reduce the rate of customer base of a business firm. New business struggles with low customers which is a positive sign for the emerging company to attract the customers from new experimental products and services (Erasmus, 2015).
Threats of substitutes
Most of the customer prefer alternative solution when they could not get desired product or services. An efficient leader must retain the customers to eliminate threats of substitutes or alternative firms by offering high discounts. The customers mainly prefer substitute in lack of time or funds. The management of an organization should offer a fast and cost-effective service quality to retain the customers.
Threats of existing rivals
Many giant rivals are already ruling different industries and business firm needs to develop sustainable strategies to survive in this aggressive context. Giant rival companies always have high core-competencies which should be analysed by the management of emerging company. The brand value is an advantage of rival companies which a normal organization do not has. In contrast, the emerging company needs to develop a good brand image in the minds of the customers by offering high quality products and services (Erasmus, 2015).
SWOT analysis
The internal business environment of an organization can be identified through SWOT analysis that follows below:
Strength
An organizational market reputation and brand equity can be recognised by its strengths. Besides that, an organization could have strengths like skilled employees, supportive leaders, customer support, high market share and satisfied shareholders. An organization can create milestones with the help of its core-competencies or strengths but it need to be retained for long (Porter, 2014). Moreover, as strengths are considered as internal component so it need to be controlled by the management itself.
Weakness
Internal conflicts and poor management could lead an organization towards bankruptcy. In other words, the organizational weakness mainly defines poor understating among management and employees. Possible weaknesses of an organization are low profitability,unskilled employees, lack of motivation and poor quality of products and services.Conclusively, weakness of an organization can be controlled by the leaders and managers.
Opportunity
The management of a business firm need to find out business opportunities to increase the proficiency and brand value. In other words, emerging demands of the customers can be considered as opportunity for an organization.
Threats
Competitors are the main threats of an organization in the market. It is an external component of this model that cannot be controlled by the management. In the competitive business context, an organization needs to analyse rivals strategy for developing sustainable business plan.
Porter generic strategies
It is an important business model that contains following factors.
Cost leadership
There are two ways to achieve cost leadership strategy such as reducing cost and increase profit while charging average price. Another way is that by charging lower price and by increasing market share to gain profitability (Porter, 2014).
Differentiation
This strategy involves different and innovative products and services development with more attractive features rather than the competitors. This strategy requires solid market research, innovation and product development process.
Cost Focus
This marketing strategy is based on the dynamic requirements of a market. The leaders of an organization need to add extra at the service market to attract the consumers. In this strategy, the management applies promotional offers to reduce profit and increase competitive advantage.
Differentiation focus
The leaders of an organization usually select this generic strategy to launch a new and innovative product in the market. In addition, this strategy helps to offer desired products as per customer requirement.
In conclusion, this essay covers few business models and theories for the business expansion process of an organization at a specific industry.
References
Day, G. (2014). The market driven organization. UK: Free Press.
Erasmus, A. (2015). Customer service in appliance sales departments and customer perspectives. Journal of Family Ecology and Consumer Sciences /TydskrifvirGesinsekologie en Verbruikerswetenskappe, 38(1).
Griffin, R. (2013). Business. Toronto: Pearson Canada.
Kolter, W. (2015). European environment outlook. Copenhagen: European Environment Agency.
Ng, Y. (2014). Increasing returns and economic organization: introduction. Journal of Economic Behavior& Organization, 55(2), pp.129-136.
Porter, M. (2014). Competitive strategy. USA: Sega Publication.
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