Pestle Analysis of Abbott Australasia Pty Ltd

COMPETITIVE STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. PHARMACEUTICAL INDUSTRY...........................................................................................1
PESTLE ANALYSIS:.................................................................................................................1
PORTER'S FIVE FACTORS......................................................................................................3
2. TOURISM INDUSTRY..............................................................................................................4
DIVERSIFICATION:.................................................................................................................5
INTEGRATION..........................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
This report consists of different marketing concepts that will be studied for determining
various factors affecting the functioning of a company and their productivity and profitability.
These will be used to identify several factors to assist in making strategies for expanding
industry. This helps to convert weaknesses of an organisation into opportunities such as PESTLE
analysis, Porter five factors, diversification and integration.
PESTLE will be used to identify factors like political, economic, social, technological,
legal and environmental factors influencing an organisation or industry. Porter's five forces
involves threat of new entrants, rivalry among existing firms, substitutes available, bargaining
power of suppliers and buyers for overall development. Here, for pharmaceutical industry,
Abbott Australasia Pty Ltd is taken and for Tourism Sector, Intro Travel is taken for study.
1. PHARMACEUTICAL INDUSTRY
Abbott Australasia Pty Ltd
Abbott Australasia Pty Ltd is a pharmaceutical company engaged in distribution and
marketing of health care products since 1956, in Australia.
Different concepts will be studied for this company and are given below:
PESTLE Analysis
Political factors: This factor determines how and to what degree the government intervenes in
an industry and on the economy (Madsen and Walker, 2015).
Below are some factors affecting this organisation:
 Laws regarding anti-trust related with medical appliances and equipment.
 Medical appliances and equipment's work week regulations.
 Tariffs and trade regulations related to Healthcare.
 Pricing regulations for Healthcare.
 Government interference and bureaucracy in medical appliances and equipment industry.
 Healthcare sector's industrial safety regulations.
1

Economic factors: For determining the current and expected future value of a business or
investment portfolio, several economic factors are needed to be taken into account such as
government policies, interest rates, management and tax, etc.
Some of economic factors affecting are:
 Operating countries economic system and stability.
 Quality of infrastructure in Medical and pharmaceutical industry.
 Availability of skilled workforce for pharmaceutical or medical industry.
 Growth rate of economy.
 Intervention by the government in free market of healthcare.
 Productivity and labour cost in the economy.
Social factors: Attitude of population and their shared beliefs are known as social factors (Team,
2013).
Following are some social factors affecting the company:
 Population's demographic and skills level.
 Society's broader nature and entrepreneurial spirit also affects company's operations, as
some societies don't encourage entrepreneurship.
 Education standards and level in Abbott Laboratory's industry.
Technological factors: Technological situations change at a fast pace and impact the company
in the market.
There some technological factors which have an impact on pharmaceutical industry:
 Impact of technology on product offering.
 Technological diffusion rate.
 Competitors recent technological development.
 Value chain structure being impacted
 Cost structures have been also impacted.
Legal factors: For trading successfully, companies need to know what is legal and what is not
for them to do or function (Dcosta and McDonough, 2015). Following are some legal factors
affecting the industry:
2

 Patent, copyright and intellectual property law.
 E-commerce and consumer protection.
 Laws regarding health and safety.
 Antitrust laws in pharmaceutical industry.
Environmental factors: Various environmental standards impact on an organisation's
profitability in market (Del Marmol and Feys, 2015). Below are some of the environmental
factors affecting this industry:
 Impact of weather and climate change.
 Regulations in pharmaceutical sector regarding air and water pollution.
 Management of waste in healthcare sector.
 Environmental pollution regulating laws.
 Laws regarding testing of medicines on animals.
PORTER'S FIVE FACTORS
Five forces analysis has been derived by Michael Porter and have a significant effect on
any firm's profitability. These include the following five forces:
Threats of New Entrants: It refers that position of company being affected by ability of other to
enter market. Below listed are some factors affected by threat of new entrants:
 High capital requirements by Abbott.
 New competitions are limited by patents.
 High entry barriers.
 Requirement of advanced technologies.
Suppliers Bargaining Power: It can also be known as market of inputs. Suppliers of raw
materials, labours, etc., have impact on business successful operations (E. Dobbs, 2014).
Below are some potential factors:
 Distribution channels are diverse, resulting in less bargaining power.
 To suppliers’ volume is a critical factor.
 Among suppliers’ competitions are high.
3

Buyers Bargaining Power: It is the ability of buyers to put pressure on firm which affects
customer's price change sensitivity (Rothaermel, 2015).
 Buyers have limited choice, due to which they end up paying more for available choices.
 Special customization is required by buyers, and won't switch to producers who have
difficulty in meeting their demands.
 Products which are important to customers, and for that product, they end up paying
more.
Threat of Substitutes: Different options that are available in the market or products offered by
others or competitors have an impact on firm's profitability. Below listed are some factors
affecting company by their substitutes:
 Substitutes are in limited number.
 Cost is high for switching to substitutes.
 Inferiority of substitute product.
Rivalry among existing firms: Degree of competitive rivalry is a major determinant of the
competitiveness of an industry (Wang, 2014).
 Growth rate of industry is fast, due to which more competition would arise.
 If Size of industry is large, then it will allow multiple firms and manufacturers to grow
without stealing other's market share.
2. TOURISM INDUSTRY
Intro Travel
It's a tour operator company, headquartered at Sydney, Australia. It provides its tour
services in Australia, Bali, Thailand and Vietnam.
Following are the strategical approaches by Intro Travel for their market planning for decisions
like market or business expansion:
Diversification
Diversification is a market strategy that is used by firms to expand their operations
through adding new products, services, markets or stages involved in production of existing
business. To enter in a new line of business which is different from current business is one of the
4

main purposes of diversification for a company Effectiveness of an organisation may also
improve by growth (Benur and Bramwell, 2015).
Advantages of diversification or growth of Intro Travel in Tourism sector
 Diversification in an organisation can lead to economies of scale. Due to diversification,
Intro Travel will have large market or greater share in market, because it would result in
more efficient use of sales calls, reduced operational time, wide market, etc.
 Due to diversification in an organisation, there would be an efficiency in labour gains,
ample and more qualified staffs, etc.
 With diversification, this company can take benefits of geographical differences such as
tax rates, wage rates, trade restrictions, etc.
Various kinds of diversification strategies
 Concentric diversification: It occurs when firm adds related products or services or
markets. The goal of such diversification is to achieve strategic fit in the market. Intro
Travel is planning to expand their business to new market or area. Company is expanding
its operations to USA and UK.
 Conglomerate diversification: When firm diversifies their business into areas which are
unrelated to their current line of business. Improved profitability of acquired firm is the
main benefit of conglomerate diversification (Diversification-of-firms-horizontal-and-
vertical 2017). For example, if Intro Travels have sufficient funds or financial resources
then they can get into hospitality sector by establishing resorts or hotels for supporting
their tourism business.
Integration
When one company owns or control more than one part of distribution process in tourism
industry occurs integration. It is important for improving organisational performance and
facilitates continuous alignment of business strategies.
Intro travel have planned for integration of their business through acquisitions and merger
strategies. They plan to merge with other organisations or firms to expand their business area or
market.
5

There are certain types of integration that can be done:
Horizontal Integration: Horizontal Integration refers to when two firms merge together; it is
where one business takes over another business which offers similar products. An example of
horizontal integration, Intro Travel merges with XYZ tours to expand their business in a
particular region or area. The reason is that they are looking at buying chain which is on the
exact same level.
Vertical Integration: Vertical Integration means when a company expands their business to
variety of different areas; any company when acquires or purchases another similar organisation
but on a different level of the chain (Vellas, 2016). Example is Intro Travel that is again in
partnership with ABC Travels. In order to find out different ways to sell their products and
services to their customers, two companies take over one another.
CONCLUSION
From this report, it is determined how different industries use various concepts for
marketing. These marketing strategies can be used to identify various factors that affects market
strategy or planning of an organisation. PESTLE analysis has been used for determining various
factors. Through diversification and integration, an organisation made strategic plans for
expanding their business and market.
6

REFERENCES
Books and Journals
Benur, A.M. and Bramwell, B., 2015. Tourism product development and product diversification
in destinations. Tourism Management, 50, pp.213-224.
Dcosta, A. and McDonough, M., 2015. Components of a PESTLE Analysis.
Del Marmol, T. and Feys, B., 2015. PESTLE Analysis. 50 Minutes.
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Team, F.M.E., 2013. PESTLE Analysis. Strategy Skills. Free management eBooks, p.15.
Vellas, F., 2016. The international marketing of travel and tourism: A strategic approach.
Macmillan International Higher Education.
Online
Diversification-of-firms-horizontal-and-vertical, 2017. [Online]. Available through:
<http://www.businessmanagementideas.com/management/growthstrategies/
diversification-of-firms-horizontal-and-vertical/4799>
7