Industry Analysis: Porter's Five Model, Ansoff's Matrix and Blue Ocean Strategy

This essay discusses the usage of Porter's Five Model, Ansoff's Matrix and Blue Ocean Strategy in the educational, tourism and entertainment and agricultural sectors. It provides a vivid description of three strategic tools and how they have been used in different sectors.

INDUSTRY ANALYSIS 1
Industry Analysis
Student
Institution
Professor
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INDUSTRY ANALYSIS 2
Introduction
Companies use different tools to gain a competitive advantage over their rivals. Some
of these tools include porter's five model, the blue ocean strategy, and Ansoff's matrix. This
essay aims to discuss the usage of these strategies in the educational, tourism and
entertainment and agricultural sectors.
Porter five forces model is a model of analysis that can be used to analyze a specific
industry and gain an understanding of the underlying profitability of a trade. It presents five
basic forces that affect different sectors (Shinkle et al., 2013, p. 1244). In the Australian
Agricultural Company Limited, the management can utilize Porter's five forces to analyze
how the five competitive forces impact on the profitability and establish a strategy for its
operations.
Australian Agricultural Company Limited is a leading Australian enterprise in the
food, beverages and Tobacco sector. Over the decades, the company has redefined unique
ways of doing business in the agricultural industry. As explained by Hunt et al. (2014, p.
130), this company is listed in the AAX (Australian Securities Exchange, with a stock market
sticker "AAC."
The porter five forces model entails the five basic forces that can shape a business
strategy. This model was developed by Michael Porter, who listed threats of new entrants,
threats of substitutes, suppliers bargaining powers, rivalry among the existing market players
and buyers' bargaining powers as five basic forces that can affect strategic development of a
business.
Threats of new entrants
To start with, new entrants in the agricultural sector include foods, tobacco and
beverage dealers. Through lower pricing strategy, this company has managed to reduce costs
and provide new value propositions to its clients (Hunt et al., 2014, p. 130). Although many
agricultural companies have entered the industry, the Australian Agricultural Company
Limited has tackled these challenges by innovating new services and products. This not only
brings new clients but also gives the old clients a reason to purchase the products of the
company.
Also, the company has majored in building economies of scale, which has enabled it
to lower the fixed costs per unit, thus enabling it to be able to offer its products at relatively
lower prices. Furthermore, by spending more time and money on research and development,
the company has been able to beat the competition as new entrants tend to be less likely to
enter a diverse industry occupied by well-established players.
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INDUSTRY ANALYSIS 3
Bargaining power of suppliers
Almost all businesses in the agricultural and foods, beverages and tobacco industry
purchase their raw materials from many suppliers. Suppliers who dominate the market can,
therefore, decrease the company’s margins. The existence of powerful supplier bargaining
power affects this sector by lowering the overall profitability of food, tobacco, and beverage.
The company has majored in establishing efficient supply chains consisting of multiple
suppliers to weaken the bargaining power of the suppliers (Allen et al., 2014 p 101). Also,
through conducting experiments on product designs using different materials, the company
has been able to control its expenditures on raw materials. Whenever a raw material’s price
goes up, it shifts to another suitable substitute.
Bargaining power of buyers
Buyers tend to be demanding. They usually want to purchase the best market
offerings available while minimizing their expenses. This exerts excellent pressure on the
company's profitability in the long-run. The more powerful and smaller the buyer base is, the
higher the bargaining power (Ellram, 2013, p. 29). In the agricultural industry, many players
have dominated the market. Therefore, there is a high buyer power. The Australian
Agricultural Company has majored in providing its products at low costs to develop customer
preference.
Threats of Substitute products
Research has proven that when a product can meet similar needs of a customer in
different ways, then the profitability of the industry is bound to suffer. The threat of
substitution is usually high when it avails a product proposition which is of more quality than
the existing product, (Ellram, 2013, p. 29). About Australian Agricultural Company Limited,
the organization has not made outstanding efforts to curb the threats posed by other substitute
products. However, if the company can be more service oriented than product oriented, then
it can win customer trusts by offering excellent services. The company should also
concentrate on what the customer needs, rather than what the customer purchases to retain
them.
Rivalry among the competitors.
The stronger the rivalry among the existing market players, the lower the prices and
consequently the lower the profitability of the industry. Ideally, the agricultural sector is very
competitive. Therefore, Australian Agricultural Company Limited strives to beat the
competition by devising some strategies as discussed in the following paragraph:
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INDUSTRY ANALYSIS 4
The company has built a sustainable differentiation. For instance, it has been known
for its high-quality tobacco, beverage, and foods. These products have formed the trademark
of its brand (Hunt et al., 2014, p. 130). Also, the company has been able to build competitive
scales by conducting appropriate competitive strategies.
SWOT Analysis
According to Cheng (2013, p. 52), the primary strength of Porter model is that it offers a
model of analyzing the market forces affecting different industries. However, its weakness is
that it does not take into consideration the non-market forces.
Ansoff’s matrix
This is a planning tool that enables a business to establish its market growth
strategies. It postulates that an enterprise’s efforts to grow depends on whether it markets
existing or new products and services in existing or new markets (Hussain et al., 2013, p.
196). The matrix presents four primary market approaches which entail penetration strategies,
product development, diversification, and market development strategies.
The tourism and entertainment industry is highly competitive as it consists of many
players. Marriot Hotel is one of the leading lodging businesses with around 4400 properties
in more than 86 states Dzhandzhugazova et al., 2016, p. 10387). It hosts tourists from many
countries providing accommodation, foods, dines and drinks and entertainment services. The
company’s headquarters are based in Maryland USA. The following figure shows the
Ansoff’s matrix analysis for Marriot Hotel.
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Product development
Transporting visitors from the
airport to the hotel using
helicopters
Conducting Monuments
Exhibitions with individual
market offers worldwide
Producing its plate and dishes
to minimize costs
Market penetration
Concentrate on targeting middle-
class clients
Sponsoring football clubs to
improve its brand loyalty
Accelerate the middle-income
clients targeting process by brand
campaigns, discounts new offer
Establishing a successful global
program, like Opera in the USA
Market Development
Establishing new branches in
other countries
Morocco: Mountains, nature
tourism and appreciating the
Arab culture
Building a new fresh market in
Iran for religious tourism
Diversification
Marriott Coffee chain:
developing a new coffee shops
Sea-cruise Tourism Company:
Establishing an enterprise that
performs sea cruise-voyages
EXISTING PRODUCT NEW PRODUCT
EXISTING PRODUCTNEW PRODUCT

INDUSTRY ANALYSIS 5
SWOT Analysis
Ansoff’s matrix has different strengths and weaknesses. Some of the strengths of this
matrix are- it lays down the possible growth approaches and concentrates on the business.
Also, the matrix displays the aims and strategies needed for an organization to succeed
(Vignali, 2014, p. 75). Furthermore, the matrix establishes a risk awareness culture in a firm.
On the other hand, some weaknesses of this matrix are that it does not show the market
developments. It is also only a theoretical model which can result in a situation whereby an
enterprise makes a lot of analysis that it does not formulate a decision.
The Blue Ocean Strategy
The Blue Ocean approach is based on a study conducted by Chan Kim and Renee.
They concentrated in analyzing the standard determinants of the blue oceans and the critical
distinctions that separate the winners from mere survivors and those that fall in the red ocean
(Agnihotri, 2016, p. 519). To provide a good understanding of the blue ocean strategy, this
essay has discussed Peirce College, which is found in the educational sector.
As explained by Bourletidis (2014, p. 645), Peirce College pursued a blue ocean
strategy to move into the education sector. It pursued a differentiation strategy based on low
costs to gain new customers. It did this by analyzing the strategic groups existing within the
post-secondary education.
Pierce college is located in Philadelphia USA. It was founded in the year 1865 to
provide training to the returning American war veterans (Mattern & Patterson, 2013, p. 3). In
1991 Arthur J. Lendo was appointed as the president of Peirce College. His main aim was to
swim out of the red ocean of me-too type of competition. The college, therefore, started its
journey by identifying the unsatisfied needs of the non-clients (Mattern & Patterson, 2013, p.
3). During this time most learning institutions focused on serving the traditional-age learners
just like Peirce. Peirce, however, realized that a large pool of students was either underserved
or overlooked. For instance, the working adults experienced difficulties to complete non-
campus degrees while going on with their duties at work.
The College reconstructed the boundaries that existed in the market by concentrating
on the strategic groups of tertiary education. Ideally, the traditional undergraduate education
consisted of two strategic groups- the junior colleges and the community (Mattern &
Patterson, 2013, p. 4). The junior colleges were offering two-year associate programs while
the accredited colleges and universities were offering four-year programs.
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INDUSTRY ANALYSIS 6
To grow demand, the college analyzed the unique strengths of these strategic groups.
It, therefore, started offering four-year degree courses using different programs- online,
onsite, and on campuses programs (Mattern & Patterson, 2013, p. 6). The on-campus
programs were taken at Philadelphia whole the on-site programs were taken in the
community and corporate cluster locations. The online, community and corporate programs
were convenient for the adult learners who could work while pursuing their studies. This
made the online enrolment to increase by more than 300 percent.
SWOT Analysis
A significant strength of the blue ocean strategy is that a firm creates a new and
attractive industry. Therefore, the threats of new competitors entering the markets and
substitutes are low, and the ability of the suppliers to bargain for higher prices and a customer
is also low (Gobble, 2013, p. 63). On the other hand, with time other firms may imitate the
new strategies making the ocean to turn red and necessitating the company to create another
blue ocean.
In a nutshell, this essay has provided a vivid description of three strategic tools- the Ansoff
Matrix, Blue Ocean Strategy and the Porter’s and how they have been used in different
sectors like the agricultural sector, educational sector and hotel and tourism sector.
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References
Agnihotri, A., 2016. Extending Boundaries of Blue Ocean Strategy. Journal of Strategic
Marketing, 24(6), Pp.519-528.
Allen, B., Porter, D. & Thompson, G., 2014. Development in Practice (Routledge Revivals):
Paved With Good Intentions. Routledge. Pp. 100-420
Bourletidis, D., 2014. The Strategic Model of Innovation Clusters: Implementation of Blue
Ocean Strategy in a Typical Greek Region. Procedia-Social and Behavioral Sciences, 148,
Pp.645-652.
Cheng, D.S., 2013. Analyze the Hotel Industry in Porter Five Competitive Forces. Journal of
Global Business Management, 9(3), P.52.
Dzhandzhugazova, E.A., Blinova, E.A., Orlova, L.N. & Romanova, M.M., 2016. Innovations
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Vignali, G., 2014. The Mix Map Modelling Approach: Research Application–A Thought for
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81.
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Wechsler, H.S., 2017. The Qualified Student: A History of Selective College Admission in
America. Routledge. Pp. 1-15.
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