Competitive Strategy Essay: Analysis of Key Strategy Development Tools

This essay provides a comprehensive overview of competitive strategy, delving into key analytical tools and their practical applications. It begins by defining competitive strategy and its importance in gaining a market advantage. The essay then explores four crucial strategy models: PESTEL analysis, Porter's Five Forces, SWOT analysis, and Porter's generic strategies. PESTEL analysis is examined as a tool for identifying external forces affecting an organization, while Porter's Five Forces is presented as a framework for analyzing industry competition. The essay also covers SWOT analysis as a technique for evaluating a company's strengths, weaknesses, opportunities, and threats. Finally, it discusses Porter's generic strategies, including cost leadership, differentiation, and focus strategies. Throughout the essay, real-world examples of Australian businesses, such as Qantas, Wesfarmers, Woolworths, and BHP Billiton, are used to illustrate the practical implications of these strategies. The essay concludes by summarizing the importance of competitive strategy in creating a unique market position and achieving superior returns on investment.

Running head: COMPETITIVE STRATEGY
Competitive Strategy
Name of the student
Name of the University
Author note

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Competitive strategy refers to long term plan of a company that helps a business in
gaining the competitive advantage over the competitors within industry. It can help a
company in the creation of defensive position within industry that can help in the generation
of the superior return on the investment. It plays a significant role in the event of an industry
being competitive when the consumers are provided with the similar kinds of products. These
are essential as it helps the companies in competing within the markets that has different
alternatives for the customers. This essay discusses about the competitive strategy of
PESTEL, Porter’s Five Forces Analysis, SWOT Analysis and the generic strategies. The
essay throws light on the implication of the business strategies for the various business of
Australia.
A PESTEL analysis can be said to be a tool that helps in the identification of the
external forces that are faced by an organization. The situational analysis can help a company
in surviving within the competitive environment. The organizations that respond to the
changes within macro-environment can differentiate from competition that helps in the
creation of competitive advantage for a company. PESTEL is an acronym and the “P” stands
for the political factors that helps in determining the influence of the government on the
specific industry. The economic factors refer to the interest rates along with the raw material
cost that has impact on the performance of a company (Madsen and Walker 2015). The social
factors refer to the social environment that helps in understanding the needs and the wants of
the customers. The technological factors refers to rate of the technological innovation that can
have an effect on the market or the industry. The legal factors includes the employment
legislation along with the consumer law that has influence on the performance of a company.
Qantas airline is the name of the flagship carrier within Australia that operates flights at
domestic along with international destination (Qantas.com 2019). The government provides
support to finances of the airlines that helps in the operations of company. The airlines is

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instrumental in providing the concession in airline tickets that helps the company in making
profits. The airline has been instrumental in making the technological developments that has
helped in the growth of the company.
Porters Five Forces is indicative of a tool that helps in the analysis of competition of a
company. It is drawn from that of industrial organization economics for deriving the five
forces that helps in the determination of competitive intensity. The five forces are the threat
of the new entrants, competitive rivalry, threat of the substitutes, bargaining power of
customers and the bargaining power of the suppliers. The profitable industries can help in
yielding the high returns that can help in attracting the new firms (Thompson, Strickland and
Gamble 2015). The new entrants can decrease profitability for the other firms within
industry. The threat of the substitutes can prove to be threatening in the event of the buyers
finding the substitute products having attractive prices or having better quality. The
bargaining power of customers means that customers have power of demanding the lower
price or product of the high quality in the event of the bargaining power being strong. The
bargaining power of the suppliers has an effect on the profits of a firm as a company have to
pay more for the materials. The competitive rivalry helps in determining the profitability of
an industry. Within the competitive industry, the firms carry out competition in an aggressive
manner that results into the low profits for a firm. Wesfarmers Limited tackles threat of the
new entrants by bringing about innovation in the products and the services
(Wesfarmers.com.au 2019). The companies in the retaining industry buys the raw materials
from the numerous suppliers. The suppliers are in the dominant position and it can decrease
the margins of a company within market.
SWOT analysis can be said to be useful technique that helps in the understanding of
the strengths and the weakness of a company. It can help in the identification of the
opportunities and the threats in relation to a company. The strengths talk about the

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characteristics of a business or a project that provides a business with advantage over the
other companies. The weakness refers to characteristics of business that places the business at
the disadvantageous position. The opportunities refers to elements within environment that
can be exploited by a business for making the profits. The threats are indicative of elements
within environment that can cause trouble for a business. The strength of Woolworths lie on
account of the market leadership and the segment penetration of the company. The weakness
of the company lies in the fact that it targets both the value and the premium segment that
helps in the selling of the affordable products (Woolworthsgroup.com.au 2019). The threats
that the company faces is on account of the fact that it faces competition from other
companies like Coles.
The Porter’s generic strategies helps in describing how a company pursues the
competitive advantage across the chosen market scope. The four kinds of generic strategies
are the cost leadership, differentiation, cost focus and the differentiation focus. An
organization can achieve the cost leadership strategy by increasing the profits by the
reduction of the costs. The differentiation strategy helps a company in making the products or
the services different so that it can rise above the competitors (Wheelen et al., 2017). An
organization should involve itself in research that can help in the development of products of
a company. It can help in the area of the effective sales and the marketing of a company that
can help market in understanding benefits that are offered by differentiated offerings. BHP
Billiton have the expanded revenue course that helps in the marketing of the company
(Bhp.com 2019). It helps the company in achieving differentiation in the market. It improves
the product positioning by bringing out the innovative advertising solutions that helps in the
aspect of cost leadership of the company.
Competitive strategy is indicative of the long term plan of a business that provides a
business with the competitive advantage. It helps a company in creating a unique position in

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the market that helps a company in getting superior return on investment. PESTEL analysis is
indicative of tool that helps a company in determining external forces that can have an effect
on a company. Situational analysis can help a company in surviving within that of the
competitive environment. Porters Five Forces refers to tool that can help in analysing
competition of a company. It is derived from industrial organization economics that helps in
determining the competitive intensity of a company. SWOT analysis proves to be a useful
technique that helps a company in assessing the strengths along with the weakness. It helps a
company in ascertaining threats and that of the opportunities for a company. Porter’s generic
strategies helps in the determination of how a company achieves competitive advantage
across that of chosen market scope. Cost leadership can be achieved by a company in the
event of it increasing profits by reducing costs.

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References
Bhp.com (2019). BHP | A leading global resources company. [online] BHP. Available at:
https://www.bhp.com/ [Accessed 2 May 2019].
Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
Qantas.com (2019). Fly with one of the world’s most experienced airlines | Qantas IN.
[online] Qantas.com. Available at: https://www.qantas.com/in/en.html [Accessed 2 May
2019].
Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy:
Concepts and readings. McGraw-Hill Education.
Wesfarmers.com.au (2019). Home. [online] Wesfarmers.com.au. Available at:
https://www.wesfarmers.com.au/ [Accessed 2 May 2019].
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic
management and business policy (p. 55). Boston: pearson.
Woolworthsgroup.com.au (2019). Woolworths Group: Quality Brands and Trusted Retailing.
[online] Woolworthsgroup.com.au. Available at: https://www.woolworthsgroup.com.au/
[Accessed 2 May 2019].