Competitive Strategy

Competitive Strategy
0

1
SWOT
While developing strategies goals in an organisation, corporations rely on SWOT
analysis in order to identify their key strengths and opportunities. The SWOT is an
acronym for strengths, weaknesses, opportunities and threats (Sevkli et al., 2012).
By using this model, companies can identify key internal factors that provide them
strengths and also evaluate their weaknesses. Through this model, the external
opportunities are identified by companies to expand their operations and increase
their profitability. Organisations also evaluate key threats that are likely to negatively
affect their growth and profitability in the market. The example of Zara can be
analysed to apply this model. Zara is a leading fast fashion company that offer its
products on a global stage. The company generates its strengths through its
responsive supply chain that enables it to change 75 per cent of its merchandise
display within a period of 3-4 weeks across the globe (Taplin, 2014).
The company controls each aspect of its supply chain, and it uses both in-house and
outsourcing operations to increase efficiency while reducing operations costs.
Weaknesses of the company include lack of investment in marketing which leads to
limiting its customer base and difficulty in controlling outsourcing operations (Turker
and Altuntas, 2014). Opportunities available for Zara include investment in marketing
strategy, expansion in foreign markets and launching a new product range. Key
threats that are likely to create challenges for Zara include wastage of raw materials,
reduce sales in foreign markets and growing competition. The company can exploit
its opportunities to tackle its threats by relying on its strengths. For example, it can
launch a new product line in emerging markets and reach new customers base to
increase its sales and reduce its competition (Taplin, 2014). It can also adopt
sustainable production practices to reduce wastage of raw materials and create a
positive brand reputation.

2
Porter’s five forces
While managing their operations in an industry or entering into a new market, it is
important that companies evaluate the attractiveness of the market and the intensity
to the competition to formulate policies that enable them to address these
challenges. In this regards, companies can rely on the five forces framework that
was developed by Michael Porter. In this model, there are five forces which
companies have to evaluate in order to make sure that they evaluate the
attractiveness and competitive in an industry; these forces are competitive rivalry,
the bargaining power of customers, the threat of new entrants, the threat of
substitutes and the bargaining power of suppliers (Lee, Kim and Park, 2012). An
example of Nestle can be analysed to apply this model. Nestle is a leading brand in
the food processing industry with operations situated in many major markets. In its
industry, the bargaining power of suppliers is high which affect the operations of
Nestle (Sethi, 2012).
The company has to rely on its suppliers since they provide raw materials for its
products and maintaining a high standard of quality is important for Nestle due to
which suppliers can raise prices of the materials which can adversely affect Nestle
(Payaud, 2014). The bargaining power of the buyer is high because there are many
options available in the market and there are no switching costs. The threat of
substitutions is also high in the industry since many small and large companies offer
similar products which are easily accessible by customers. The threat of new
entrants is low since there are already established major brands in the industry and
the initial investment is considerably high (Sethi, 2012). Competitive rivalry is low
because Nestle has become a global brand that is known across the globe which
provides a competitive advantage to the company.