Strategic Development Tools and Their Application

This essay evaluates the significance of strategic development tools in analyzing a company's competitive position. It discusses the application of Ansoff Matrix, Porter's Five Forces, and SWOT analysis for business growth. The essay highlights the advantages and disadvantages of these tools and provides examples of companies that have applied them to develop strategies for future success.

Competitive strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Competitive strategy refers to the long term plan of any organisation with the aim to gain
competitive advantage over its rivals in the marketplace. The present essay of competitive
strategy will provide an understanding to the individual of the foundational strategy development
models. The essay will analyse the strategy development tools that are used in the industries for
understanding their competitive position in the marketplace.
MAIN BODY
Strategy development tools in the organisation are the effective technique that mostly
used in the company when they develop strategies for the sustainable growth. Business utilise
strategic development tools to determine on what extent the organisation is developing and what
further improvement can be done (Abdel-Basset, Mohamed and Smarandache, 2018). It will help
the companies to understand their strength and weakness as well as opportunities and threats.
SWOT analysis
SWOT analysis is a helpful technique that evaluate by the companies to understand their
strength and weaknesses. This is an internal analysis of the organisation. SWOT analysis made
from the four major parts of the organisation, in which S stands for Strength, W stands for
Weakness, O stands for Opportunity, T stands for Threat. Business can divide the chart into the
four quadrants and they can assign the sales, management and operation as well as other internal
strength to each quadrant. Approx all the businesses use this technique to understand their
capabilities and need of improvements. For example; Apple Inc. implement this in their
competitive strategy and able to understand that the price point they fix is one of their weakness
and they are not able to grab all the segment of consumers and accordingly the management team
started to provide some of their products on discount so that all the people can able to purchase
it. Another example is; Coca-Cola able to understand that biggest strength is the brand name and
their marketing technique from all the competitors (Boscagli, 2019). The unique taste and
marketing help them to stay ahead from the competition in the marketplace. Consumers see Zara
as a high quality product provider in an affordable rate that put an image of the brand on
consumer's mind and this provide them an opportunity to maintain their position and improvise
their image as consumers actually want. On the other hand, Fitbit is a biggest competitor for the
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Apple watch that is a threat for the business as Fitbit provide similar products with similar kind
of features to the consumers in very low price from Apple.
Porter's Generic strategies
The generic strategy is an effective strategic development technique that was introduced
by Michael Porter (David, 2019.). It can be used by the organisations to determine the strategic
direction of the industry. This strategy can be applied to the products as well as services in all
industries. The strategies, under this model categorised in three parts; Cost leadership,
Differentiation, Focus.
Cost leadership strategy applied by the company when they aim to become lowest cost
producer. The company that use this strategy opt to offer their products and services at as low
price as possible. Objective of Walmart is to keep the retail price low and by using this strategy
the company has been very successful at this.
The differentiation strategy applied by the company when they aim to provide services
and products that are different and more attractive from the competitor's product and services.
The best example of this strategy is implemented by McDonald. The services of McDonald are
different from its competition and they focuses on the quality product and services so that
consumers can have personal connection with them (Jiang and et. al., 2018). They bring quality,
convenience, value and services for their customers and make them feel that they are getting a
break in their hectic day. The reason behind this is they have highly skilled and creative product
development team.
Focus strategy concentrates on the narrow segment or specific niche market. Company
focuses on the understanding the dynamics of the unique need of consumers. Either they develop
uniquely low cost or well specified products for the market. The best example is Pepsico. They
successfully adopts focus strategy, Pespsico has emerged as the second largest consumer
packaged products. By using this the company has significantly strengthened its competitive
position in the beverage segment (Levinthal, 2018).
Porter's five forces
Porter's five forces analysis is a framework that helps in analysing the level of
competition within a specific industry. It is an effective way to analyse the competition
especially when company plan to expand their business in new marketplace or introducing new
product line. Following are the five forces under this model;
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Bargaining power of buyer: It help in to analyse the level on which consumers are able to
put the company under pressure. Bargaining power of consumer is low in the airline industry.
Bargaining power of supplier: This force enable company to analyse that how much force
does supplier have on the company (Lorenzo, Rubio and Garcés, 2018). Apple Inc. provides a
quality products to their consumers. For that purpose they required quality raw material that
limits the quantity of supplier. From this situation it can be stated that the bargaining power of
supplier of Apple Inc. is high.
Threat of new entrants: New entrant in an organisation brings desire and capacity to gain
market share. For example; threat of new entrants in airline industry can be consider as low to
medium because to do that a huge amount of investment is required and high level of recruitment
of the human resources. Even low cost carriers like; Ryanair and South-west airlines entered in
the airline industry and get a name in the market as competition after so many years and
continuous innovation.
Threat of substitute products: This force help the business to understand how easy it is for
the consumer to switch from the company to the competitor's product and services (Phadermrod,
Crowder and Wills, 2019). As an example, Zara have threat of substitute as there are many high
street brand where consumer can switch easily if the company does not maintain their image.
Competitive rivalry: This force help the organisations to examine the intensity of
competition currently have in the marketplace. For example; Under Armour faces intense
competition from Adidas, Nike, etc.
Ansoff Matrix
To portray alternative business development strategy, Igor introduced a matrix that
focused on the current products and market of the business. Ansoff matrix provides four various
strategy; In Market penetration, business want to achieve growth with their existing product and
services and aim to enhance their market share (Singh and et. al., 2018). In market development,
the growth is ensure by the organisation by targeting their existing products to the new market
segment such as; Zara in India. In product development, business develop new product targeted
to their existing consumer and market segment such as; Apple Inc. with the product line of
watch. In diversification, the firm develops by diversifying into new businesses by introducing
new products and services for new market.
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CONCLUSION
From the present essay it has been evaluated that the strategic development tool is
essential to apply by the companies in order to understand their competitive position in the
market. The tools have their own advantage and disadvantage for the industry. Many of the
companies applied the tools in their strategic development so that they can further develop the
strategies in future.
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REFERENCES
Books and Journals
Abdel-Basset, M., Mohamed, M. and Smarandache, F., 2018. An extension of neutrosophic
AHP–SWOT analysis for strategic planning and decision-making. Symmetry. 10(4).
p.116.
Boscagli, M., 2019. Competitive strategy analysis in the food system. CRC Press.
David, A. M., 2019. Porter’s Competitive Strategies Influence on Performance of Mobile
Telecommunication Companies in Kenya. International Journal of Scientific Research
and Management. 7(02).
Jiang, R. and et. al., 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.
Levinthal, D. A., 2018. From Strategy to Strategic Organization. In Behavioral Strategy in
Perspective (pp. 71-77). Emerald Publishing Limited.
Lorenzo, J. R. F., Rubio, M. T. M. and Garcés, S. A., 2018. The competitive advantage in
business, capabilities and strategy. What general performance factors are found in the
Spanish wine industry?. Wine Economics and Policy. 7(2). pp.94-108.
Phadermrod, B., Crowder, R. M. and Wills, G. B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management, 44, pp.194-203.
Singh, M. K. and et. al., 2018. A glimpse of sustainable electronics manufacturing for India: A
study using PEST-SWOT analysis. In Global Value Chains, Flexibility and
Sustainability. (pp. 271-281). Springer, Singapore.
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