Using Strategy Development Tools: Examples of Australian Pharmaceutical Industries Ltd and Deloitte Consulting

This report discusses the significance of external factors that can influence a company’s operations. It evaluates examples of Australian Pharmaceutical Industries Ltd and Deloitte Consulting to understand how strategy development tools assist the management in forming business schemes. The report includes a PESTLE analysis of Deloitte Consulting and a Porter’s Five Forces analysis of API.

Competitive Strategy

Table of Contents
Introduction...............................................................................................................................2
Australian Pharmaceutical Industries Ltd (API).........................................................................3
Porter’s Five Forces................................................................................................................3
Deloitte Consulting.....................................................................................................................6
PESTLE Analysis......................................................................................................................6
Conclusion..................................................................................................................................9
References................................................................................................................................10
List of Figures
Figure 1: Australian Pharmaceutical Industries Ltd Logo..........................................................3
Figure 2: Porter's Five Forces Model..........................................................................................5
Figure 3: Deloitte Consulting Logo.............................................................................................6
Figure 4: PESTLE Analysis Model................................................................................................8
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Introduction
Strategy development tools are common among organisations, and they rely on these tools
for identifying various factors which affect their business and its operations. Firstly, the data
collected from these tools are used by the management to form business policies based on
the key insight about the industry or customers. Secondly, the management analyses the
information gathered to develop business strategies which are targeted towards eliminating
the issued faced by them in order to improve their performance and sustain their growth.
Thirdly, two of the most common tools include PESTLE and Porter’s five forces framework
which assist in classifying relevant elements which influence the operations of a company. In
comparison, PESTLE analysis assists the management in evaluating the external factors
which affect their business such as political changes, legal environment, technological
factors and others. On the other hand, Porter’s five forces analyse various forces which
affect the operations of an enterprise while operating its business in an industry. In this
report, we will evaluate examples of Australian Pharmaceutical Industries Ltd and Deloitte
Consulting to understand how strategy development tools assist the management in
forming business schemes.
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Australian Pharmaceutical Industries Ltd (API)
Porter’s five forces model was developed by Michael Porter which is used by corporations in
identifying various factors which influence the attractiveness or unattractiveness of an
industry. Australian Pharmaceuticals Industries (API) is an Australia based organisation
which is involved in pharmaceutical manufacturing, distributing, retailing, marketing
programs and business advisory services. The corporation was founded in 1910, and its
headquarters is situated in Sydney, New South Wales, Australia (API, 2018). The company is
known for providing health and beauty products across the nation, and it mainly operates in
two industries: pharmaceuticals and health and beauty.
Figure 1: Australian Pharmaceutical Industries Ltd Logo
(Source: API, 2018)
Porter’s Five Forces
 Threat of new entrants
It is referred to the risk of entry of new competitors in the market. The cost for entering into
the pharmaceutical industry is relatively high since corporations have to find new supplies,
manufacturers, and distributors. In case of API, the company has also established effective
manufacturing (licensed), retailing and distributing channels across the country based on
which it is able to provide low-cost products, innovative schemes and others, thus, threat of
new entrants is low (TCS, 2018).
 Bargaining power of suppliers
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It is referred to the ability of the suppliers to influence the prince of their supplies which
affect the pricing strategy of the companies. In case of API, the company has a positive
relationship with its suppliers, and it has entered into a contract with them. Due to a
positive relationship and long-term contracts, suppliers have low ability to increase the price
of their products.
 Bargaining power of buyers
It is referred to the ability of customers to drive the prices of the company’s products. In
case of API, the customers have various options from which they can choose based on which
corporations are unable to increase their prices. Buyers are often demanding, and they put
pressure on corporations operating in this industry, thus, the bargaining power of buyers is
high in the industry.
 Threats of substitute
It is referred to similar products which can fulfil the demand of customers. In case of API,
there are a number of substitutes available against the products of the company. Customers
can easily choose another product if they are dissatisfied with the pricing of a product. Thus,
the threat of substitutes is high in the Australian pharmaceuticals industry.
 Competitive rivalry
It is referred to existing competition between competitors. In case of API, there are various
competitors that increase substantial competition to the company such as Alphapharm,
Sigma Pharmaceuticals and Symbion Health (Canberra Times, 2008).
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Figure 2: Porter's Five Forces Model
(Source: CGMA, 2013)
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Deloitte Consulting
PESTLE analysis is a framework which is used by marketers to evaluate various external
factors that affect a company’s operations. It includes political, economic, social,
technological, legal and environmental factors. In order to understand this framework, an
example of Deloitte Consulting is evaluated in the report which has offices in different
locations in Australia. The company has over 790 partners and over 8000 people working in
14 offices which are situated throughout the country. It has achieved record revenue of
AU$2.013 billion in the two quarters of 2018 which has 15 increased from 2017 (Deloitte,
2018a).
Figure 3: Deloitte Consulting Logo
(Source: Deloitte, 2018b)
PESTLE Analysis
 Political
The political environment in Australia is relatively volatile; however, Deloitte Consulting has
sustained its growth in the market due to its positive brand image and effective service
strategy. However, the government also supports Australian consulting corporations since it
has spent over $1 billion to expand this market (Creighton, 2015).
 Economical
Since Deloitte Consulting is an international enterprise, changes in exchange rates affect its
profitability. The management consulting industry in Australia is relatively growing, and it
has grown 5 percent to a value of $4.6 billion (Consultancy, 2017).
 Social
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Deloitte Consulting focuses on shaping the social services ecosystem across government,
businesses and the social sector to deliver the best outcomes for Australia’s most vulnerable
communities. They implement environment sustainability policies to reduce their footprint
and engage in community-based services to help local societies in addressing various social
issues by investing in the Deloitte Foundation and other non-profit and non-governmental
organisations (Deloitte, 2018d).
 Technological
Cyber threats such as WannaCry cyber-attack poses new challenges for Deloitte Consulting
since it has been attacked itself. On the other hand, technological advancement in Australia
assists the company in reducing its labour costs by investing in robotics and artificial
intelligence (Consultancy, 2017).
 Legal
While operating its business in Australia, Deloitte Consulting has to comply with a large
number of local and international laws in order to avoid legal consequences. The regulations
regarding customer policies are strict in Australia, and Deloitte Consulting has to comply
with the policies of Fair Trading Act which impose restrictions on the company (Business,
2018). For example, it cannot get into an unfair agreement with other competitors such as
Ernest and Young and Accenture to create monopoly in the Australian management
consulting industry.
 Environmental
The corporation focuses on reducing its carbon footprint by using green energy sources to
power its operations. Furthermore, it has launched various initiatives regarding waste
management and recycling in order to promote environmental and sustainability policies in
Australia (Deloitte, 2018c).
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Figure 4: PESTLE Analysis Model
(Sources: Professional Academy, 2018)
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Conclusion
In conclusion, reflections on the significance of external factors which can influence a
company’s operations substantially are discussed in the report. These factors are key
sources for executives in identifying various opportunities and threats face by enterprises
based on the changes and trends of the market. Based on effective evaluation of these
factors, the corporations can form plans which assist them in making sense of market
changes and how various outside factors result in affecting their business. The results
gathered based on PESTLE analysis enable the management to make specific choices
regarding the future of the organisation based on how the brand should be presented in the
market and develop new products. Porter’s five forces framework provides crucial industry
insights to the senior level executives for classifying competition in the industry based on
elements such as available substitutes, easy in market entry, bargaining power or suppliers
and customers. Examples API and Deloitte Consulting enable to recognise the way these
models are used by the administration while forming business policies to tackle the issues
faced by them in their respective industries. By relying on these tools, the executives can
ensure their effectiveness in the market while at the same time sustain the future growth of
the business.
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References
API. (2018) About Us. [Online] Available at: http://www.api.net.au/about-us/ [Accessed on
13th August 2018].
Business. (2018) Fair trading. [Online] Available at: https://www.business.gov.au/products-
and-services/fair-trading [Accessed on 13th August 2018].
Canberra Times. (2008) API prepares for shake-up in pharmaceuticals. [Online] Available at:
http://www.images.canberratimes.com.au/business/api-prepares-for-shakeup-in-
pharmaceuticals-20080430-29sv.html [Accessed on 13th August 2018].
CGMA. (2013) Porter’s Five Forces of Competitive Position Analysis. [Online] Available at:
https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html [Accessed
on 13th August 2018].
Consultancy. (2017) Australian management consulting market grows to $4.6 billion.
[Online] Available at: https://www.consultancy.uk/news/14107/australian-management-
consulting-market-grows-to-46-billion [Accessed on 13th August 2018].
Creighton, A. (2015) Governments spend near $1bn a year on consultants. [Online] Available
at: https://www.theaustralian.com.au/national-affairs/treasury/governments-spend-near-
1bn-a-year-on-consultants/news-story/327028d1bf3c8f79e4cf68498f1232dd [Accessed on
13th August 2018].
Deloitte. (2018a) About Deloitte Australia. [Online] Available at:
https://www2.deloitte.com/au/en/pages/about-deloitte/articles/about-deloitte-
australia.html [Accessed on 13th August 2018].
Deloitte. (2018b) Consulting. [Online] Available at:
https://www2.deloitte.com/au/en/services/consulting.html [Accessed on 13th August 2018].
Deloitte. (2018c) Environment and sustainability. [Online] Available at:
https://www2.deloitte.com/au/en/pages/about-deloitte/articles/environment-
sustainability.html [Accessed on 13th August 2018].
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Deloitte. (2018d) Our Community. [Online] Available at:
https://www2.deloitte.com/au/en/pages/purpose/articles/our-community.html [Accessed
on 13th August 2018].
Professional Academy. (2018) Marketing theories – PESTLE Analysis. [Online] Available at:
https://www.professionalacademy.com/blogs-and-advice/marketing-theories---pestel-
analysis [Accessed on 13th August 2018].
TCS. (2018) Australian Pharmaceutical Industries unites retail and wholesale businesses on
single ERP platform. [Online] Available at: https://www.tcs.com/australian-pharmaceutical-
unites-retail-wholesale-on-single-erp-platform [Accessed on 13th August 2018].
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