Building Competitive Advantages through Strategic Management

This study material explores the concept of strategic management and how it helps organizations build competitive advantages. It discusses different levels of strategies, such as functional level, business level, and corporate level, and their impact on growth and expansion. The material also includes a case study on NIB Australia and its effective use of strategies to stay ahead in the market.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the student
Name of the university
Author note

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Table of Contents
1. Introduction..................................................................................................................................2
2. Porter five forces analysis............................................................................................................2
3. Building competitive advantages through functional level strategy............................................6
4. Building competitive advantages through business level strategy..............................................8
5. Building competitive advantages through corporate level strategy.............................................9
6. Mintzberg 5 Ps of strategy.........................................................................................................10
7. Strategies for continuing with new capabilities.........................................................................13
8. Conclusion.................................................................................................................................15
References......................................................................................................................................17
Bibliography..................................................................................................................................20

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1. Introduction
Strategies support an organization in continuing with the capabilities of the same while
operating in different global markets. The different levels of strategies that are utilized by the
organizations supported the same in continuing with the operations in observance to the
competition encountered by the same (Hitt & Duane Ireland, 2017). The evaluation of the
market competition and the offerings that are made by the organizations support in identifying
the loopholes and thereby design strategies for improvements in the line of offerings. The
developments in the propositions in the functional level, business level and corporate level
support an organization in adhering to the systematic management of strategies for growth and
expansion (Meyer, Neck & Meeks, 2017). The development of the strategic planning initiatives
through engagement of the stakeholders supports an organization in sticking on to the
effectiveness of the operations in observance to the needs of the business.
In the current business scenario, effectiveness of the business level and corporate level
strategies determine the performance of the organizations. One of the major examples of this is
growth of NIB in the Australian region (Nib.com.au., 2019). It is one of the fastest growing
health funds in the country and one of the top 200 largest stocks in the Australian security
exchange (Nib.com.au., 2019). This denotes that NIB is following an effective bunch of
corporate and business level strategies that are helping in staying ahead in the competition. The
report will discuss about the competitive scenario of the industry where NIB is operating with
the help of the Porter five forces. In addition, the current business level and corporate level
strategies being followed by them will also be critically analyzed.
2. Porter five forces analysis

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Figure 1: Porter’s five force
(Source: Engert, Rauter & Baumgartner, 2016)
Threat of new entrants  There are constraints in entering the
market due to higher investments
required and the regulatory actions.
Larger investments are not affordable
by the start up firms, which has
constrained the growth of the startup
firms in the Australian economy (Bettis
et al., 2014).
 The presence of large insurance
companies hold little scope for the
growth of new entrants in the markets
which has affected the capability of the
organization in continuing with the

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effectiveness of the operations.
Bargaining power of the buyers  Brokers and distributors of the
concerned organization have more
power over the service and product
offerings of NIB and the manner in
which the services might be distributed
to the consumers.
 End users have little or no influence on
the organizational operations which
supported the venture in continuing
with the effectiveness of the operations
in observance to the needs of
sustainable growth (Simon, Fischbach
& Schoder, 2014)
Bargaining power of the suppliers  The suppliers like the reinsurers and the
financial organizations have a better
control over the costs that might be
incurred by the concerned venture
(Engert, Rauter & Baumgartner,
2016). The development of the
different activities that are initiated by
the organization supported the same in
continuing with the operations of the

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venture in observance to the demand of
the customers.
Threat of substitutes  Few substitutes of the concerned
venture’s offerings are present in the
market. However, the different
substitutes of the concerned venture
offered enhanced quality offerings,
which affected the competitive benefit
of the venture while upholding the
effectiveness of the operations.
 However, the lack of a good amount of
substitute organizations in the markets
has enhanced the potentials of the
venture in continuing with the
effectiveness of the operations while
adhering to the demand of the
consumers (Foss & Hallberg, 2014)
Rivalry among the existing companies  There is a high competition in the
market through the existence of a fair
number of insurance companies. The
high competition in the market might
affect the capabilities of the concerned
venture in making he customers aware

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of the propositions due to the biased
brand loyalty of the same.
 The competitors of the concerned
venture provide similar amenities and
financial services to the clients. The
similarity of the propositions has also
minimized the unique selling
proposition of the venture while
operating in the different sections of the
Australian markets.
The higher amount of market competition in the concerned markets affected the strategic
capabilities of NIB holdings in continuing with the operations and drawing the awareness of the
consumers towards the product or service offerings. On the other hand, the concerned
organization also faced issues relating to the similarity in the service propositions of the same
with the existing competitors, which resulted to the minimization of the unique selling
proposition of the venture. Karadag (2015) stated that the development of different activities that
are initiated by the organizations are reliant on the assessment of the market structure and the
competition encountered by the same. The lack of uniqueness in the offerings of the concerned
venture affected the potentials of the same in continuing with suitable market operations.
Therefore, the concerned organization might take steps to develop a diverse range of
propositions in order to meet the needs of the clients and boost the USP (unique Selling
Proposition) of the same.

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3. Building competitive advantages through functional level strategy
The functional strategies of a organization is based on the different functional areas of a
venture related to promotions, HR, process designs, R&D operations and the IT. There are
number of functional level strategies being followed by NIB in gaining competitive advantages
that will be discussed in the following section.
Promotions
The concerned venture has taken steps to develop a range of promotional strategies
through the utilization of different social media platforms. The utilization of the social media
platforms for promoting the financial service propositions and the insurance policies has
supported the venture in maximizing the reach of awareness among the clients. Bergh et al.
(2014) opined that maximization of reach through the promotional strategies support a venture in
continuing with a stronger awareness among a wider group of target audience. The delineation
of the policies and new offerings through the social media platforms like Facebook and Twitter
supported the venture in maximizing the rate of awareness among the existing clients while
drawing the attention of the new customers towards the propositions made by the venture
(Nib.com.au., 2019). The utilization of a range of social media vehicles also supported the
venture in making the internal stakeholders aware of the service propositions that are made by
the venture and the future scopes of development. On the other hand, the utilization of the social
media platforms also supported the venture in gathering feedbacks from the customers on the
policies and offerings for future developments.
HR processes

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The HR processes of an organization are based on the development of the needs of the
organization in sticking on to the effectiveness of the operations through active collaboration.
The concerned venture has taken steps to develop positive working environment, which
supported the same in inducing the collaborative culture among the workforce. On the other
hand, the transparency of the operations in the organization supported the same in retaining
employee satisfaction. Rosenberg Hansen and Ferlie (2016) opined that employee satisfaction
and the positive workplace environment support an organization in sticking on to the
effectiveness of the operations in observance to the demand of the customers. The transparency
of the operations in the venture supported the same in continuing with the operations in
observance to the requirements of the business in gaining a competitive edge (Nib.com.au.,
2019). The concerned organization has taken steps to develop suitable training and development
programs for the employees. The training and development programs have supported the venture
in enhancing the skills of the employees for ensuring the uninterrupted functioning of the
systems.
Clarity of the organizational processes
The clarity of the organizational practices has supported the venture in continuing with
the operations of the same while operating in diverse global markets. Transparency in the
process designs supported the employees in facilitating the uninterrupted flow of activities with
the aim of achieving the competitive edge for the venture. Lacerda, Ensslin & Ensslin (2014)
opined that the strategic functioning of the processes supports an organization in continuing with
the operations of the same while adhering to the sustenance related needs of the venture.
Therefore, the concerned organization designed a transparent operating system with the purpose
of sticking on to the effectiveness of the operations in observance to the demand of the clients.

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4. Building competitive advantages through business level strategy
Cost leadership
The concerned organization aimed at continuing with a cost leadership structure with the
aim of continuing with the effectiveness of the unique propositions. Most of the competitors in
the market provide similar offerings. Therefore, the concerned organization utilized cost
leadership strategy for sticking on to the competitive benefits. The cost leadership based
structure of the organization supported the venture in continuing with the propositions in
continuing with the effectiveness of the operations in observance to the demand of the
customers. Durand, Grant and Madsen (2017) stated that the different cost leadership strategies
that are initiated by the organizations supported the same in continuing with the operations of the
venture in observance to the demand. The cost leadership strategy of the organization supported
the same in distinguishing the line of product and service offerings.
Differentiation strategy
Currently, the concerned venture is taking steps to develop the differentiation strategy
with the aim of sticking on to the uniqueness of the products and services. The unique range of
products and services has supported the concerned organization in gaining a competitive benefit
in a market was the competitors provided similar propositions of the clients. On the other hand,
the utilization of the strategy supported the venture in continuing with the propositions of the
same with reference to the insurance and financial service related needs of the customers.
Karadag (2015) service differentiation supports an organization in continuing with the potentials
while achieving a competitive benefit over the other players in the market. Therefore, the
development of the generic strategy supported the concerned organization in continuing with the

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operations of the same in sticking on to the effectiveness of the offerings while adhering to the
expectations of the clients. The differentiation strategy supported the venture in continuing with
the propositions while adhering to the demand of the consumers (Nib.com.au., 2019). Therefore,
the implementation of the differentiation strategy supported the venture in continuing with the
uniqueness of the service propositions to maintain the effectiveness of the operations.
5. Building competitive advantages through corporate level strategy
Growth and expansion
The concerned organization has taken steps to expand the venture in the different regions
of Australia. The expansion and growth of the concerned organization supported the same in
enhancing the rate of economic sustenance. The growth and expansion of the organization
supported the same in enhancing the rate of profitability. Simon, Fischbach and Schoder (2014)
noted that the growth and expansion of the organizations support the same in maximizing the
rate of economic sustenance through diversification of the revenue streams. The diversification
of the revenue streams supported the venture in sticking on to the effectiveness the process
design and the R&D operations of the same. It has also supported the venture in continuing with
the dynamic capabilities for retaining in the respective markets. Therefore, the market expansion
has supported the venture in continuing with the resource base for further enhancement of the
process designs.
Renewal and stability
The renewal and stability of the organization is based on the feedbacks that are gathered
by the same from the community stakeholders. The feedbacks supported the venture in sticking
on to the effectiveness of the operations in observance to the demand of the customers. Bettis et

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al. (2014) opined that the feedbacks from the customers support an organization in enhancing
the process flow through identification of the loopholes and mitigation of the same. In this
relation, the concerned organization has taken steps to retain the stability of the operations
through continuous evaluation of the reviews from the clients and modifications in the systems.
Therefore, the strategy supported the venture in sticking on to the sustenance of the same while
operating in the international markets.
6. Mintzberg 5 Ps of strategy
Mintzberg 5 Ps of strategy model implementation facilitates in analyzing five versions of
strategy for the selected organization, NIB Australia. The five components include plan, pattern,
position, ploy and perspective analysis of which can facilitate the insurance organization to
develop highly effective strategies (Bruton, Khavul, Siegel & Wright, 2015).
Figure 1: Mintzberg 5 Ps of strategy of NIB Australia
(Source: Bruton, Khavul, Siegel & Wright, 2015)
 Plan- NIB perceives strategies as a plan and also believes that most of the published
strategy documents by the insurance company are deemed as plans. This serves as an
attempt by strategists to develop a way for NIB to be successful. The insurance company
has stated plan for its future years that will ensure constant profitability as a universal
financial service provider by avoiding being broken up. The ways in which this strategy
is realizable totally depends on the external influences (Karami, 2016). This is for the
reason that primarily along with the public opinion due to government is likely to act at

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the time there is a perceived requirement to position itself to perform operative activities.
Planning for NIB is a good strategy that is required to be more than just a plan and can
contribute the success of the plan.
 Pattern- Pattern in NIB Australia acts as the post hoc realization which is often
explained by strategy analysts of the instance organization. These strategies are identified
as an attempt to so things such as continuing with a resource based view of the insurance
company. NIB considers purchasing start-ups that might have initiated as the semi-
random acquisitions to attain useful patents (Mathews et al. 2016). The insurance
company also consider that such patents are cheaper and simpler the licensing and
focused on same NIB also ensures that the competitors do not attain the license.
However, after considering the pattern strategy, NIB ensures that this is something that
the financial institution must do continuously.
 Position- NIB makes strategic attempts to position itself in the insurance sector. For
instance, the insurance company has made great attempts in delivering insurance services
that can facilitate the consumers in making better financial decisions. Over the year NIB
Australia has attained better understanding of the needs of a broad range of businesses
from the sole traders to the large privately owned companies that facilitates in dealing
with fierce competition in the sector (Vovchenko et al. 2017). It has maintained its
leading position in Australia through offering competitive services to consumers such as
a mobile application that facilitates the consumers of the insurance company in managing
their insurance services conveniently through accepting payments along with managing
invoicing.

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 Ploy- This strategy implementation technique facilitates in dealing with complex
business aspects faced by NIB. For instance, the insurance company claims that through
decreasing its tax liability within a specific nation it can employ more people and
considering same the government also seeks to close the loopholes related with tax
(Lokuwaduge & Heenetigala, 2017). This ploy strategy is considered being detrimental
for NIB is it persuades the insurance company to shift its operations offshore.
 Perspectives- In following the perspective view, NIB Australia views that a strategy can
be a manner in which it can view the world. Service along with this certain other factors
can shape the ways in which strategies are developed and implemented in NIB Australia.
The selected perspectives also determines whether the options are acceptable or
unparallel in NIB and it is also considered that cultural limits always exist when
attempting to impact the change in the insurance organization (Svirydzenka, 2016).
7. Strategies for continuing with new capabilities
New capability building can facilitate NIB in continuing with high strategic priority that
can support the companies in performing at their best in the industry. From analyzing the
company’s functional, business and corporate level strategies along with carrying out porter’s
five forces strategy it has been observed that the insurance company is facing strategic issue of
offering less diversified insurance services in comparison to it competitors. Following are the
strategies that are offered to NIB in continuing with its new capabilities:
 NIB must develop its strategic capability of rapid global expansion strategy and it must
develop its branches within the foreign nations focused at the institutional level.
Implementing market penetration strategy of the company can also facilitate in

14STRATEGIC MANAGEMENT
positioning NIB as one of the leading financial service provider. The insurance
organization must also develop its strategic capability of expanding its consumer oriented
financial service in several nations.
 NIB is also recommended to carry out sector-wise performance evaluation of NIB that
can facilitate the financial institution to have constant watch on the improvement areas.
This can facilitate the financial institution in dealing with issues that are associated with
its underperforming areas. In case of NIB, the home loans sector is observed to not work
at synergy with its other insurance based services and based on same the interest rate on
certain insurance services has been raised. Based on such situation, the company must
focus on continuing with is strategic capability of expanding its consumer base through
opening several branches internationally. The company is also recommended to develop
its strategy capability of product differentiation through which it must develop new
financial services in attaining consumer attention that can increase the consumer base of
the financial institution.
 To attain competitive edge in the market, NIB must consider continuing with its new
strategic capability of restructuring in which it can consider suspension of its new
business sales of all its direct instance products but it will continue to service and renew
it’s in force insurance policies. The unique capabilities and resources that are to be
attained to deal with its strategic issues such as sticking on to liberation of insurance
products along with the labor markets in several parts of the world. . It has also supported
the venture in continuing with the dynamic capabilities for retaining in the respective
markets. Therefore, the market expansion can support the venture in continuing with the
resource base for further enhancement of the process designs.

15STRATEGIC MANAGEMENT
 The financial institution must to build a capability of continuing with superior value in
the market through creating a source of advantage in its financial abilities that can
enhance its peer performance. Moreover, the distinctive capability of the financial
institution must also focus on continuing with set of capabilities that can develop an
opportunity to deliver exceptional financial services based value within the market. This
can serve as a source of advantage for NIB in terms of cost control opportunities of
revenue generation along with risk mitigation and management.
 The major focus of the financial institution must be on transforming its business through
simplifying the financial or insurance provided by NIB. This can be ensured by the
company through decreasing costs along with improving the financial experiences of its
consumers. This can transform the management structure of the organization along with
continuing with consumer approval process for insurance products along with continuing
with set of new insurance products. The financial institution must also focus on actively
managing its capital all across its portfolio of insurance based businesses through
building a super regional strategy in a capital-efficient manner. Serving the products for
certain specific consumers along with managing the relationships along with potentially
expanding services with time cab facilitate in continuing with financial insurance
products.
8. Conclusion
The report discussed about the competitive scenario of the industry where NIB is
operating with the help of the Porter five forces. In addition, the current business level and
corporate level strategies being followed by them will also be critically analyzed. It was gathered
that the different cost leadership strategies that are initiated by the organizations supported the

16STRATEGIC MANAGEMENT
same in continuing with the operations of the venture in observance to the demand. The cost
leadership strategy of the organization supported the same in distinguishing the line of product
and service offerings. From analyzing the company’s functional, business and corporate level
strategies along with carrying out porter’s five forces strategy it has been observed that the
insurance company is facing strategic issue of offering less diversified insurance services in
comparison to it competitors. NIB Australia views that a strategy can be a manner in which it can
view the world. Service along with this certain other factors can shape the ways in which
strategies are developed and implemented in NIB Australia. Based on such situation, the
company must focus on continuing with is strategic capability of expanding its consumer base
through opening several branches internationally. The company is also recommended to develop
its strategy capability of product differentiation through which it must develop new financial
services in attaining consumer attention that can increase the consumer base of the financial
institution.

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