Competitive Strategy: Tools for Gaining Competitive Edge

This document provides an overview of competitive strategy and explores three key tools used in strategic planning: Porter's Five Forces, Ansoff Matrix, and Input-Output Model. It includes examples of how these tools are applied in the case of Coles Supermarkets. The document also discusses the importance of these tools in gaining a competitive edge in the market.

Competitive Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................2
1. Porter Five Force Analysis......................................................................................................3
2. ANSOFF Matrix......................................................................................................................5
3. Input-Output Model................................................................................................................6
CONCLUSION................................................................................................................................7
REFRENCES ..................................................................................................................................8

INTRODUCTION
The long-term plan of firm for gaining competitive edge over their competitors within
industry is referred to as competitive strategy. It aims at creation of defensive positioning within
business through which superior return on investments can be attained. Strategies plays crucial
role when industry is highly competitive as well as customers are provided with identical
products or services (Madsen and Walker, 2015). Basically, it denotes future oriented plans that
have been enforced by an organisation for creation of affirmative position within specified
sector. It assists business entities to generate high return on investment as compared to their rival
firms within marketplace.
Along with this,an example is taken to understand the concept of competitive strategies
for this Coles Supermarkets is taken into consideration. It was founded on 1914 and is
headquartered in Victoria, Australia. It is retail as well as consumer service chain and Australian
Supermarket. It comprises of 3 tools for development of strategies as well as their utilisation
within business. The tools which have been used are Porter's five force model, Ansoff Matrix
and Input-Output model. They are liable for providing knowledge associated with three major
aspects of firm i.e. business sector, strategies and functional graph.
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MAIN BODY
Within present working environment, business entities utilities ample of strategy
formulation tools for drafting their strategies for longer period of time. There exist number of
alternatives for which firm can opt for. Some of these are Porter's five forces, PESTLE, PROFIT,
Resource based view, Swot analysis, input/ output, Ghemawat and Ansoff Matrix. Near about
every business entity within corporate world is confined to utilize these models for gaining
competitive edge above their competitors as well as have success within marketplace (Haynes,
2015). With respect to this, details related with 3 strategical tools have been provided here, they
are Ansoff's matrix, Porter's five forces and Input-output model. In addition to this, they have
been explicated by the usage of practical example.
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1. Porter Five Force Analysis
The analytical tool that is being utilized for determination of intensity of competition that
prevails within industry along with their profitability level is defined as porter's five forces
model. It is responsible for identification of five competitive forces that is responsible for
shaping each industry as well analyze their weaknesses along with strengths (Mathooko and
Ogutu, 2015). Basically, it is a strategical tool that is used by firms for gaining comprehensibility
in sectors to which they pertains. It comprises of five 5 forces and out of this 3 are concerned
with horizontal rivalry, they includes threat of new entrants, substitutes as well as competition
that pertains within business sector. The rest of 2 forces are concerned with vertical rivalry and
they are bargaining power of supplier as well as consumers. Through the acknowledgment of
extent of these five forces with respect to industry in which they (firm) deliver their services,
organization can formulate decisions with respect to launch of their new product, expansion, its
growth and various other factors. With the assistance of knowledge of these elements associated
with business sector, a firm can ensure whether their services are attractive or not fascinating. A
continuous undertaking initiatives with an aim to acquire knowledge associated with such forces
have became crucial as when alterations occur in any of these five forces it leads to creation of
impact on overall profitability of the firm (Takata, 2016).
Example: Instance of Coles Supermarkets is taken, it has been found that management of
firm conducts Porter 5 force analysis before any kind decisions are being taken like enhancement
within product portfolio by the usage of diversification. Threat of new entrants in this industry
is low that renders management of supermarket with an idea related with launch of new as well
as creative products within market at affordable prices for enhancing ratio of their sales and
profitability. Furthermore, competitive rivalry in this sector is high, this aids management of
Coles Supermarket to formulate efficacious strategies which posses capabilities for attracting
Australian population. Threat of substitutes within this sector is very high, this aids entity to
acknowledge that they need to improvise features of services or products that are being provided
by them to address demands of their customers. Bargaining power of suppliers is low for Coles
Supermarket, as it is large firm, they have the wide option to shift to other vendors for
accomplishment of their needs associated with material (Jarzabkowski and Kaplan, 2015).
Lastly, bargaining power of buyers is high as this assists Coles Supermarket to have effectual
pricing strategies which will influence economic groups for purchasing the products that are
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being furnished by Supermarket. Therefore, by analyzing these forces, entities can appropriately
utilize their core strategies, competencies as well as business models to enhance their overall
revenue that is above average.
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2. ANSOFF Matrix
The marketing planning model which assists business for determination of their products as well
as market growth strategies is referred to as Ansoff's matrix (Gurcaylilar-Yenidogan and Aksoy,
2018). This is defined as key strategy development tool that aids organization to carry out their
strategic planning with respect to marketing. This is executed by firms for exploring
opportunities that are present within market as well as render scope for enhancing their revenues
along with profit. This model intimate firm about gaining growth by gathering knowledge
associated with different substitutes that they have with respect to strategies. Results attained
from this framework will aid entity o formulate strategies. Through the assistance of this, firm an
identify that whether it is feasible for them to have access within new market or not. This means
that by making use of different strategies of this matrix, firm can acquire growth. Basically, it
comprises of 4 strategies, they are as: market penetration, product & market development and
diversification (Howson, 2016). These strategies comprises of accumulation of new old
geographies as well as segments of products.
Example: By taking an instance of Coles Supermarket, this strategic development model
is utilized by management of corporation for deciding strategic course of actions to ensure long
term sustainability. Market penetration assists entity to acquire knowledge with respect to
adoption of strategies for having enhanced popularity within market of Australia. Market
development helps management of supermarket for formulation of decisions with respect to
market where they are delivering their existing products to enhance their position within global
market. Product development acts as an effectual strategy that assists significant retailer for
gaining understanding of services that can be acquired by launch of new services in an existent
market. Diversification renders organization with data associated with market that can be
competitive as well as strategic for facilitating expansion within international market (Soltanifar
and Ansari, 2016). Therefore, this illustrates that with the assistance of Ansoff, entities can opt
for any of the four strategies with respect to resources that are being obsessed by them for
attaining growth.
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3. Input-Output Model
The functional graph that is liable for identification of inputs, outputs as well as carry out
necessary processing that is needed to transform specified input to required output is referred to
as IPO (Input-Output) model (Jensen, Mandeville and Karunaratne, 2017). This model is being
utilized by firms for acquiring understanding about inputs along with their transformation which
are crucial for attaining specified output. With the assistance of this model, an entity can make
sure that firms carry out practices as well as carries out activities smoothly before, during as well
as after carrying out the process of transformation.
Example: Coles Supermarket utilities input-output model for addressing issues that are
faced by them while carrying out processes associated with hiring. The technical people that are
hired by firm have left organization this has created complex procedures for firms with respect to
recruitment as well as rendering training to new candidates (Biener, Eling and Wirfs, 2016).
This is time consuming and costly process. Herein, HR team has decided to put together certain
group of people who possess extended experience for acquiring new individuals. They will work
in a team to formulate input-output model with respect to procedure of hiring. This model has
been specified below:
(Source: Input Output Model For Hiring Process In WOOLWORTHS, 2019)
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Ill
ustration 1: Input Output Model For Hiring Process In WOOLWORTHS

CONCLUSION
From above, it has been found that there exist diverse number of strategies development
tools that can be utilised by firms for gaining competitive position within the market. With
respect to this, Porter's five forces aids firms to acquire understanding related with industrial
attractiveness as well as extent to which competency prevails within market. Apart from this,
Ansoff matrix have been utilised which assist business organisation for gaining
comprehensibility about different strategies which can be opted by firm for acquiring growth as
well as enhancement within their operations in market. At last, input-output model assists firm
for gaining knowledge associated with prerequisites that are needed for conducting processes
related with conversion of inputs within outputs.
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REFRENCES
Books and journals
Mathooko, F. M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management, 29(3), pp.334-354.
Takata, H., 2016. Effects of industry forces, market orientation, and marketing capabilities on
business performance: An empirical analysis of Japanese manufacturers from 2009 to
2011. Journal of Business Research, 69(12), pp.5611-5619.
Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools‐in‐use: A framework for understanding
“technologies of rationality” in practice. Strategic management journal, 36(4), pp.537-
558.
Gurcaylilar-Yenidogan, T. and Aksoy, S., 2018. Applying Ansoff’S Growth Strategy Matrix To
Innovation Classification. International Journal of Innovation Management, 22(04),
p.1850039.
Howson, P., 2016. Commercial due diligence: the key to understanding value in an acquisition.
Routledge.
Soltanifar, E. and Ansari, M., 2016. Matrix-Collage: An Innovative Methodology for Qualitative
Inquiry in Social Systems. Electronic Journal of Business Research Methods, 14(1).
Jensen, R.C., Mandeville, T. D. and Karunaratne, N. D., 2017. Regional economic planning:
Generation of regional input-output analysis. Routledge.
Biener, C., Eling, M. and Wirfs, J. H., 2016. The determinants of efficiency and productivity in
the Swiss insurance industry. European Journal of Operational Research, 248(2),
pp.703-714.
Haynes, P., 2015. Managing complexity in the public services. Routledge.
Madsen, T. L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
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