Model of Competitive Reality: Analysis and Strategies

This article discusses the model of competitive reality and its application in analyzing competitors and developing strategies. It covers competitor analysis, market commonality, resource similarity, drivers of competitive behavior, competitive rivalry, likelihood of attack and response, and outcomes. The focus is on Huon Aquaculture, its key competitors, market position, and financial performance.

Draw and discuss the model of competitive reality
The following is the model of competitive reality that Huon Aquaculture uses to forecast
behaviours of their leading competitors and strategize on ways of handling risks associated those
behaviours.
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1. Competitors Analysis
In order to succeed in both domestic and global markets, organizations must conduct a detailed
analysis of its key competitors. Currently, Huon Aquaculture has seven leading competitors
namely Tassal, Arnarlax, Petuna, Scottish Salmon, Leroy sea food, Cook Seafood and Marine
Harvest Companies (Blucher, 2015). The Market Cap ($M) for Huon Aquaculture Group
Competitor analysis
 Market
commonality
 Resource
similarity
Drivers of
competitive
behaviour
 Awareness
 Motivation
 Ability
Competitive rivalry
Likelihood of attack
 First-mover
benefits
 Organization
size
 Quality
Likelihood of response
 Type of
competitive
action
 Actor’s
reputation
 Market
dependence
Outcomes
 Market
position
 Final
performan
ce

Limited (HUO) is 395 while that of the Tassal Group Limited (TGR), their leading competitor
stands at ($M) 845 (Investmart, 2019).
1.1 Market Commonality
Huon Aquaculture has several competitors in its hatcheries, processing, feeding, nurseries,
harvesting and marine farming markets (Huon Aquaculture, 2019). This company operates in
four different markets but it mainly concentrates on hatcheries and processing. In 2018, due to
the increased volumes and enhanced pricing in the local market as well as gradually growing
strength in the international price, sales revenue for all its products was $317.9m, a figure that
marked a 23% increment from the previous accounting year (Huon Aquaculture Group Limited,
2018). Even though it Tassal is the main competitor in hatcheries market, it is the leading firm in
marine farm and processing facilities adequately distributed in the Australian market. In order to
overtake Tassal in the hatcheries market, Huon Aquaculture need put into place more
sophisticated marketing mechanisms including hiring experts to aid in their marketing
undertakings.
1.1 Resource Similarity
As at 2018, Huon Aquaculture’s current assets ($M) totalled to 223.0 while non-current assets
($M) amounted to about 300 both totalling to $523.0 million intangible assets (Huon
Aquaculture Group Limited, 2018). It is vital for Huon Aquaculture to evaluate the business
resources (both in types and amounts) owned by Tassal and other leading competitors since
companies with comparable business assets tend to have comparable strengths and weaknesses
and in most cases apply similar strategies.
2. Drivers of Competitive Behaviour

The competitive behaviour of Huon Aquaculture’s is influenced by its market commonalities as
well as resource similarities. Competitive behaviour is driven by three main drivers namely,
ability, motivation, and awareness. These three factors affect strategies and course of actions
taken by Huon Aquaculture Company while participating in market competitive rivalry (CHEN,
et al., 2007).
Awareness is the degree to which competing companies recognize the extent of their shared
interdependence which results from market commonality and resource similarity (Hoskisson,
2013). It is true that if there is more resource similarity and market commonality, then there is a
high degree of awareness about competitor actions and responses. Motivation on the other hand
concerns the company’s incentive to take a given course of action or react to a rival’s attack and
relates to perceived losses and gains. Any action taken by Tassal Company will directly affect
Huon Aquaculture’s market and the level of competition between the two corporations is bound
to increase. Actions from other minor competitors may not affect Huon Aquaculture and
therefore it might not be motivated to engage in any rivalry with them. Ability, on the other
hand, relates to every corporation’s resources and the flexibility they provide. Without enough
resources Huon Aquaculture may lack the ability to attack their competitors and/or respond to
their actions.
3. Competitive Rivalry
As noted in the preceding sections, Huon Aquaculture Company has several competing firms in
the marketplace though it holds a significant market share as well. In order to enhance forecasts
regarding competitors’ responses and actions, management at Huon Aquaculture is needed to
evaluate both “Likelihood of Attack” factors and “likelihood of Response” factors.

3.1 Likelihood of Attack
In this subsection, three principal factors which shape the competition action of Huon
Aquaculture are analysed:
Movers’ benefit: This refers to the competitive course of action to defend or set up the market
position (Hitt, et al., 2009). There is a quite a big number of Australian companies dealing with
hatcheries, processing, feeding, nurseries, harvesting and marine farming with a mounting
chances of new consumers owing to the high demand for this products and services. In a similar
manner, due to unfavourable climatic conditions such as protracted dry seasons, productivity is
dwindling. Decrease in production incentivizes global competitors from other markets such as
India, USA to target Australian market. This implies that, for Huon Aquaculture to be ahead with
the first movers ‘benefits like huge market share and customer commitment, it has to invest more
on capital so as to augment productivity and reach wider global marketplace.
Organizational size: This is a factor which shows competitive actions as well as their timing
(Gluck, et al., 2019). For example, For instance, Arnarlax in 2018 realized revenue totalling to
Norwegian krone (NOK) 114 m (Ramsden, 2019)which is equivalent to $13.111 million and
another close competitor of Huon Aquaculture, Tassal generated USD 203.5 million for the same
period (White, 2019). As a result, Tassal can be said to be a huge organisation and likely to
incept more competitive course of actions while Arnarlax can be said to be a flexible and nimble
rival.
Quality: Quality in this context refers to the way an organization competes through its chain
activities. Despite the continuous increase in the number of sales over years, the quality of their
main products and services is deteriorating due to adverse weather conditions. Since this low

quality enhances their competitors’ competitiveness, Huon Aquaculture ought to come up
strategies to maximize the quality of their products.
3.1 Likelihood of Response
Any competitive course of action made by Huon Aquaculture is affected by the likelihood or
probability that its competitors such as Tassal and Arnarlax will react to it and by the
effectiveness and form of that reaction. In 2018, Huon shared it 2018-2013 strategic plan
outlining their proposed collaboration with D’Entrecasteaux (D’Entrecasteaux and Huon
Collaboration, 2018). The primary aim of their partnership was to facilitate investment in
waterway projects to engage people and encourage them to take action, inform local
communities and improve and share knowledge. Strategic actions such as differentiation,
partnership, mergers and acquisitions can impel competitors to engage in similar strategies to
combat the level of competition. However, these strategic moves often trigger insignificant
competitive responses from rivals since they require time and commitment of other financial
resources.
Competitors’ reputation is another key factor that Huon Aquaculture should put into
consideration. This company can estimate the likelihood of its rivals’ responses to its planned or
current actions by carrying out a comprehensive assessment of past responses.
In addition, another factor which can trigger strategic reactions is market dependence. After
Huon Aquaculture is among the leading companies in the Australian’s food and processing
industry implying that it has significant local market dependence and any strategic actions from
principal competitors, means it will react powerfully to attacks putting their market position at
risk.

1. Analysis of Outcome
The model of competitive reality enables an organization to comprehend and forecast
competitors’ behaviours in order to mitigate various risks associated with stiff competition. Huon
Aquaculture Company, for instance, can analyse its market position and financial performance to
figure out whether it has made appropriate forecasts about their rivals’ responses and course of
actions. If its market position and financial performance are deteriorating, proper feedback will
be availed for the Huon to make correct forecasts. Based on the model of competitive reality, the
subsequent subsections will analyse Huon’s market position and financial performance.
4.1 Market Position
After Tassal, Huon controls a considerable Australian market in the foods and processing
industry. Upon implementation of its three year Controlled Growth Strategy (CGS), this
company has now emphasized on delivering efficiency benefits which will come from
incorporating the latest innovation and technology throughout the organization whilst at the same
time expanding their market share and enhancing the overall position in the marketplace.
Innovation and technology will enable this organization to support production particularly in
Australia’s offshore locations over the next five years (Huon Aquaculture Group Limited, 2017).
However, Huon should not just focus on dominating the Australian market. It should implement
measures to global and initiate a competitive market position at the international scale.
4.2 Financial Performance
Financial performance of Huon Aquaculture has been increasing gradually for the three fiscal
years 2016, 2017, and 2018 with revenue ($M) ranging at 233.7, 259.5, and 317.9 respectively.
Even in other financial parameters such as cash flows, book value, shareholder returns and

annual P/E among others, this company is doing splendidly well (Investsmart, 2018). However,
despite the success in its financial performance at the domestic level, Huon is not performing
effectively in the international market due to the various challenges it faces. It is therefore vital
for it to develop stringent measures in order to compete favourably and emerge among the best
organizations in the global food processing industry.

References
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