Competitive Strategies and Diversification Techniques

The assignment explores the concepts of competitive strategy dynamics, PESTLE analysis, and Porter's five forces to identify factors affecting an organization's growth and planning. It also discusses different market strategies for business expansion through internal and external factor analysis.

STRATEGIC
DEVELOPMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. EDUCATIONAL INDUSTRY...................................................................................................1
PESTLE Analysis........................................................................................................................1
PORTER FIVE FORCE ANALYSIS OF GEELONG GRAMMAR SCHOOL........................2
2. TRAVEL AND TOURISM INDUSTRY....................................................................................3
PORTER'S GENERIC COMPETITIVE STRATEGY OF TRAFALGAR:..............................3
Diversification strategy by Trafalgar: ........................................................................................3
RECOMMENDATION & CONCLUSION....................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
In this present assessment two industries are selected for analysis. Bright horizons have
been chosen for childcare industry and Trafalgar company has been chosen for tourism industry.
Bright Horizons was founded in the year 1986 and its Headquarter is in Watertown,
Massachusetts. This Childcare will focus on taking care of children below the age of 5 years.
Further, this report will aid in analysing the external environment by using PESTLE analysis.
Furthermore, by using Porter five force mode, the competitive position of childcare centre will
be assessed. Porter's Generic Competitive strategy will be made on Trafalgar, which is a tourist
company which provide tourist holiday packages so for this company Diversification strategy is
shown separately.
1. CHILD CARE INDUSTRY
BRIGHT HORIZONS
PESTLE Analysis
AS Childcare industry see the frequent changes so it is important to know the
environment of childcare centres PESTLE Analysis helps staff and care takers of child cares to
know the environment of centres and its effect on future of the children (PESTLE Analysis,
2016).
Here is the PESTLE analysis of Bright Horizons:
POLITICAL FACTORS
These factors determine that how the government intervenes in an industry and how
Political factors affect the long term profitability of childcare. Bright Horizons faces the problem
of changes that are implemented by government in its tax system and amendments in law related
to childcare industry. So, here below are some factors affecting such centres.
 Child care are being privatised so it affects the profitability
 Corruption in the country
ECONOMIC FACTORS
Performance of Bright Horizon and its profitability is determined by economic factors. Some
economic factors affecting the child care centres are as follows:
 Inflation rate and interest rates affect the profitability of the childcare
 A big risk of main staff members moving to new centres
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SOCIAL FACTORS
Common beliefs of people are termed as social factors. Bright Horizon should follow such
policies which will impact overall society at large.
 Birth rates are declining in Australia which will reduce the joining number of children
 Due to shifting of people affects the enrolment.
TECHNOLOGICAL FACTORS
In today's world technology changes very fast and it affects every sector, below are some
points affecting Bright Horizon (Warren, 2016).
 Diffusion in technology
 Out dated hardware of computers
 Development in technology by competitors
LEGISLATIVE FACTORS
Legal guidelines are followed by Bright Horizon which are implemented on the company.
 Healthy and protection law
 Copyright and patent law
ENVIRONMENTAL FACTORS
Bright horizon should follow all factors which are related to environment. Company must
practice such policies which will not harm environment in any way (PESTLE Analysis,2017).
 Waste disposal
 Buying patterns of consumer
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PORTER FIVE FORCE ANALYSIS OF BRIGHT HORIZONS
Childcare industry is the most growing industry which face so many challenges of new
entrants and a real tough competition. Below Porter's five force analysis is described (Porter,
1989).
1. Threats of new entrants: In consumer service innovative ideas are always brought by
the new entrants by doing things in different and innovative way or reducing cost of the
baby products. So to manage the threats of new entrants bright horizons as to follow such
things as follows:
 By brining innovative ideas
 Build economies of scale so that care centre can tackle the new entrant
2. Bargaining power of suppliers: There are so many suppliers in the market and they are
in controlling position so they can decrease the margins so the maximum impact of
higher supplier bargaining power is that it decreases the overall profit of the
organisationa
3. Threats of substitute services: When client needs are met by different organisation by
giving better or similar services, profitability of Bright horizon gets suffered. So every
firm should be service oriented by understanding the basic needs of the customer.
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Illustration 1: PESTLE Analysis,2017
(Source:PESTLE Analysis,2017)

4. Rivalry among the existing customers:s If the rivalry among the present players is high
then it will let the prices down and will result in decrease the overall profitability of the
industry. So Bright Horizons can tie up with its competitors rather than competing for a
small market.
5. Bargaining power of buyers: In today's world buyers are very demanding and they
always want to pay minimum price for the products and services. So, Bright Horizons
can handle it by building many customers for their child care centres.
2. TRAVEL AND TOURISM INDUSTRY
TRAFALGAR COMPANY
PORTER'S GENERIC COMPETITIVE STRATEGY OF TRAFALGAR
1. Cost leadership: Trafalgar can reduce its cost to earn profits and can make a strategy to
charge average prices from the customers so that it can give a tough competition to other tourist
companies (Smith, Grimm, and Gannon, 2014).
2. The differentiation strategy: Tourism company can give attractive offers to the customers
and provide discounts to them on their first visit, and additional discounts on next deals. This all
can be done by Trafalgar to be different from other companies and offer attractive tour packages
so that it can earn more profits and can attract new clients by such new offers and discounts.
3. The focus strategy: In this strategy, company will focus on a particular targeted market and
will understand all the aspects and dynamics of the market to provide specific attractive
packages to particular market which will help the company in building its brand and growth.
Diversification strategy by Trafalgar:
Trafalgar can use this strategy when the organization wants to enter in to a new industry
other than that market where company is currently operating. It is very risky to enter in to new
marketplace as the organization has no knowledge of new market so it is required to do analysis
of the market and make some strategies for the same. To diversify in the new market, company
needs to make fresh packages and discount offers or alliance with some existing company so that
it can get benefits (Spanos and Lioukas,2015).
Advantages of diversification or growth of Intro Travel in Tourism sector:
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 Diversification in organisation can lead to economies of scale. Due to it the company will
have greater share in market, because of that it would result in more efficient working,
better tour packages and client can enjoy the journey (Porter, 2014)
 Due to diversification in the organisation there would be efficiency in labour gains
because more people will get job due to entry of new company in the market. With diversification company can enjoy the benefits of new locations and their rules.
Such as tax rates, wage rates, new culture etc.
Various kinds of diversification strategies:
 Concentric diversification: Trafalgar is currently operating in Australia and is planning
to expand its business in new market or area. Company is expanding its operations to
USA and UK. As such diversification occurs when firm adds related product or services
or markets. The main aim of such diversification is to expand its business (Harrigan,
2015).
 Conglomerate diversification: When a company plans to enter in to a complete new
field and diversify its business to some other fields also that is called Conglomerate
diversification. Such steps are taken by company mainly when they are making profits
from the current business and wish to expand the organisation in another industry too.
 Horizontal Diversification: This strategy is adopted by an organisation when it is
offering new services that appeal to the company's recent client base.
 Vertical Diversification: This kind of strategy is followed when an organisation goes
back to its previous stage of services providing technique or method
RECOMMENDATION & CONCLUSION
From this Above report it has been concluded that how different industries use
competitive strategies to know the concepts for marketing. These competitive strategies can be
used to identify various factors that affects market and on the growth and planning of an
organisation. PESTLE analysis has been used to determine all the factors Such as political,
economic, social, technological, legal and environmental factors which effects the company.
Along with this Porter's five forces are utilized to determine the factors which affect organisation
by bargaining power of suppliers and buyers, substitutes, threat of new entrants, and rivalry
among existing firms. Organisations can use different market strategies for growth of their
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business through analysing external and internal factors to develop as well as change their
enterprise strategies to achieve competitive advantages in the market.
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REFERENCES
Books and Journals
Warren, K., 2016. Competitive strategy dynamics (pp. 276-279). Chichester: Wiley.
Smith, K.G., Grimm, C.M. and Gannon, M.J., 2014. Dynamics of competitive strategy. Sage
Publications, Inc.
Spanos, Y.E. and Lioukas, S., 2015. An examination into the causal logic of rent generation:
contrasting Porter's competitive strategy framework and the resource‐based
perspective. Strategic management journal, 22(10), pp.907-934.
Harrigan, K.R., 2015. Joint ventures and competitive strategy. Strategic management
journal, 9(2), pp.141-158.
Porter, M.E., 2013. How competitive forces shape strategy. In Readings in strategic
management (pp. 133-143). Palgrave, London.Porter, M.E., 2014. Competitive strategy:
Techniques for analysing industries and competitors (Vol. 198). Free press.
Online
PESTLE Analysis, 2017. [Online]. Available
through:<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>
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