Competitive Strategy | Assignment

COMPETITIVE
STRATEGY

Table of Contents
1. EXECUTIVE SUMMARY.........................................................................................................1
2. INTRODUCTION.......................................................................................................................2
3.MAIN BODY................................................................................................................................3
4.CONCLUSION.............................................................................................................................6
5.REFERENCES.............................................................................................................................7
6. APPENDIX..................................................................................................................................8
.........................................................................................................................................................8

1. EXECUTIVE SUMMARY
The project report summarise about the different theories which are used by the different
organisations to achieve the competitive advantage. These theories are used as per the need and
nature of companies. Additionally, this project report consists mainly four theories which are :
PESTLE, Swot analysis, five forces and cost volume profit analysis. Each of them plays
important role in the context of different companies. Like pestle analysis is helpful for analysing
about macro environment factors and it is useful for Morrisons company to evaluate external
factors. Swot analysis is being used by ASDA store limited to check internal strength, weakness
and external opportunities and threats. Same as Porter's five forces are important for evaluating
the level of competition in the environment and Waitrose company implement this tool for
analysing the competition in the market. As well as cost volume profit analyse is useful for
checking the level of profitability in relation to cost and volume, like Tesco plc company
evaluate their profits and revenue by this tool.
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2. INTRODUCTION
Competitive strategies are important for the companies because it provides a framework
to achieve the competitive advantage over rivalry firms(Madsen and Walker, 2015). Due to these
strategies organisations can put their resources in a direction wherein they can't be beaten by
other competitive companies. Eventually, in this cut throat business environment it is difficult for
the companies to exist without implementation of any specific competitive strategies. The project
report consists detail information about the four competitive strategies which are helpful for the
organisations to sustain strongly in the external environment. The four strategies are as follows:
Pestle analysis, swot analysis, fiver forces and cost volume profit analysis. Additionally in this
report, these theories are linked up with the companies which shows the practical uses of these.
Mostly successful organisations are using these strategies to raise above from the other
companies. Herein, it is important to implement these theories as per the nature of business,
otherwise it will be worthless.
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3.MAIN BODY
(a) Pestle analysis- Pestle analysis is a kind of framework which is useful for analysing
the impact of external environment's factor on the organisational performance(Parnell, Long and
Lester, 2015). Basically, it is used for evaluating impact of macro environment's factors on
organisations. This tool consists six elements of macro environment which are: political,
economical, social, technological, legal and environmental factor. All these have negative and
positive impact on the companies. Like political environment is related to various tax policies,
laws and legislation as well as stability and instability of political conditions. Economical factors
include change in the interest rates, inflation rate etc. Social factor consists the changes in need
and demand of customer as well as various culture and religion. Technological factor is related to
change in the technology and techniques of production or service offering. Same as legal factor
refers to various kind of legal legislation and rules for customers and employment and
environmental factor includes weather conditions, natural climates etc. Companies which are
exists, definitely impacts due to above mentioned forces. For example Morrisons company that
deals in the all around the world impacts due to this factor. This is why because all these six
elements of pestle model like changes in the political situations can effect their business as well
as political relation of UK with other countries can also impact their sell. Changes in the
economical terms like fluctuation in the interest rate can impact their financial situations. Social
factors like change in the public demand can effect the company's selling as well as variation in
the technology force them to adopt advancement. Apart from these, legal legislation, laws
influence the above mentioned company to implement the various act for welfare of employment
and changes in the environmental conditions can force the company to revise the policies and
strategies. So all these factors are important in the context of Morrisons company and they have
to cope up with these. It can be used as competitive strategy by above company because if they
run their functions as per these factors then no other companies can beat them in the competitive
environment.
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(b) Swot analysis- Swot analysis is a kind of strategic tool which is helpful in analysing
the strength, weakness, opportunities and threats. If companies use this tool then they can easily
evaluate about what changes they need to do in their policies and strategies. Strength refers to
those advantages which a company has in the environment(About swot analysis, 2019). Like
ASDA store limited has the strength of better understanding of customers buying behaviour.
Weakness highlights the negative aspects of companies, for example the above company has
weakness of failure of “Low price campaign” . Additionally opportunities refer to possibility of
future profit if companies identify it. The ASDA store limited has the opportunity that wall-mart
is in the support of their, if they fails in future . On the other hand, threats includes those factors
which can create trouble for the companies, like above company has threat of tough competition
in the UK market. If ASDA company does their swot analysis in regular interval then they can
achieve competitive advantage.
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(c) Porter's five forces model- This model was evolved by the porter which contains five
forces that are related to the competitive environment and helpful for profitability. These five
models are as follows: Competitive rivalry, supplier power, buyer power, threat of substitution
and threat of new entry. First one is competitive rivalry which refers to level of competition
which a company has in the environment( Armstrong, 2013). The Waitrose company has great
rivalry in the environment due to this they have to cut the price to attract more customers.
Second model is of supplier power which states the power of suppliers by which they can raise
their prices, it effect to the above company if their suppliers increase their prices. Third model is
about the power of buyers by which they can bargain for prices of products and services. The
Waitrose company get effected due to this if customers demand for cutting the price of products.
Fourth model is related to the threat of substitute products which can be offer at lower price due
to this Waitrose company has to be aware about any substitute product in the market. The final
model is related to threat from the new entrants which can enter in the market and can give
competition. Waitrose company has the threat of new entrants that can easily enter in the UK
market. So this model can be used as competitive strategy by the above company. This is
possible if they make policies and strategies as per these five forces.
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(d) Cost volume profit analysis- Cost volume profit analysis is helpful in analysing how
changes in cost and volume can impact to the profitability of the companies. In other words it
evaluate the behaviour of profit in relation to change in the cost and volume of products.
Additionally, it also analyse the number of units sold to achieve the targeted income. CVP
analysis is also known by the break even analysis(Russo and Minto, 2012). It has following
components like: selling price, number of units sold, fixed cost etc. The Tesco company uses this
model for checking the profitability by comparing the cost with the income generated through
sells. Due to this they can analyse that how much units have been sold out in a particular time
gap. If they use this model effectively then it will be easy for them to sustain in the competitive
environment because it works as effective competitive strategy.
4.CONCLUSION
From above project report it has been concluded that in the absence of the competitive
strategies, companies can not stand in the front of competition. There are wide range of strategies
and models which are used by companies. Some of them are like: Pestle, swot, five forces and
cost-volume profit analysis. All these have significant impact on the organisational performance
and each of them has different role for the companies. Additionally, it can be concluded that
Pestle model is used for analyse of macro environment as well as swot analysis is implemented
for evaluation of micro environment. As well as porter's five forces are important to evaluate the
level of competition in the external environment and cost volume profit analysis helps in
determining the relationship between cost and profit. So all these strategies are useful for giving
tough competition as well as to sustain in the market.
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5.REFERENCES
Books and journals:
Madsen, T .L. and Walker, G., 2015.Modern competitive strategy. McGraw Hill.
Parnell, J. A., Long, Z. and Lester, D., 2015. Competitive strategy, capabilities and uncertainty in
small and medium sized enterprises (SMEs) in China and the United
States.Management Decision. 53(2). pp.402-431.
E. Armstrong, C., 2013. Competence or flexibility? Survival and growth implications of
competitive strategy preferences among small US businesses.Journal of Strategy and
Management. 6(4), pp.377-398.
Russo, M. V. and Minto, A., 2012. Competitive strategy and the environment: A field of inquiry
emerges. In The Oxford handbook of business and the natural environment.
Online
About swot analysis.2019.[online]. Available through: <Russo, M.V. and Minto, A., 2012.
Competitive strategy and the environment: A field of inquiry emerges. In The Oxford
handbook of business and the natural environment.>
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6. APPENDIX
(a) Pestle analysis-
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(b) swot analysis-
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(c) Porter's five forces:
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(d) Cost-volume profit analysis:
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