Holmes Institute HI6006: Competitive Strategy Analysis Essay

This essay provides a comprehensive analysis of competitive strategy, focusing on key models and their practical application. It begins with an introduction to the importance of strategy in business success, emphasizing the need for both internal and external environmental analysis. The essay then delves into specific tools, including SWOT analysis to assess strengths, weaknesses, opportunities, and threats, using Woolworths as a case study. It also explores Porter's Five Forces model to evaluate industry competitiveness, examining the threats of new entrants, substitutes, supplier and buyer power, and existing competition. Furthermore, the essay examines the resource-based view through the VRIO framework, identifying valuable, rare, imitable, and organizationally capable resources. Finally, it discusses Ansoff's matrix strategy, outlining market development, market penetration, product development, and diversification strategies. The essay concludes by reiterating the significance of strategic analysis and the application of these models for achieving business success.

Running Head: COMPETITIVE STRATEGY 0
COMPETITIVE STRATEGY
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4/25/2019

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Contents
Introduction......................................................................................................................................2
Swot analysis...................................................................................................................................2
Porters Five force.............................................................................................................................3
Resource based view........................................................................................................................4
Ansoff’s matrix strategy..................................................................................................................5
Conclusion.......................................................................................................................................6
Works Cited.....................................................................................................................................8

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Introduction
Strategy plays a vital role in attainment of a business successfully. Developing strategy is a
crucial aspect in an organization, which includes analysing internal and external business
environment at the first place. The report objective is to understand the internal analysis tools
like SWOT analysis and resource based view of an organization and external analysis tools like
porter’s five-force model and Ansoff’s matrix (Chatzoglou & Chatzoudes, 2018). These analysis
will understand using real life example in the report further.
Swot analysis
SWOT analysis is analysing strength, weakness, opportunity and threat for a company to
strategize in a way to use the business’s strengths and to increase opportunities or overcome
weakness and evade threats. For instance, SWOT of Woolworths, an Australian based retail
chain that is providing consumer goods through discounted departmental store. For example
strengths of Woolworths include a large number of products and services to offer to customers, a
mixed distribution channel that is brick and motor and online channel, attractive CSR activities,
Huge market share, a well-known brand in Australia. The weakness of Woolworths includes the
late digital presence of the company in the retail industry, lower global presence unlike other
competitors like Wal-Mart. The opportunities that the company can gain include technological
advancement in the industry, higher promotional activities to enhance international presence, use
of social media tool, and expansion of the company into nations that are not tapped yet.
However, the company also has potential threats like in the financial year 2014 the company lose
customers, price wars in the industry; growth of online retailing is slower in Australia, and

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higher competition in the industry like Aldi’s aggressive expansion strategy (Hunt & Bicen,
2017). The recommended strategy for Woolworth would be SO strategy that is using its strengths
to gain opportunities in the near future to gain competitive advantages (woolworthsgroup, 2018).
Porters Five force
Porters five force model is one of the external analysis tool used to analyse the industry and
development of the competitive strategy of the company. The five forces according to this tool
that will affect the strategy of the corporation include:
First is the threat of new entrants, this threat includes the risk of new corporations entering into
the industry and can reduce the sales of the company. For example, Woolworths is part of the
retailing company, where entry is not too difficult due to no entry barriers. Nevertheless, for
Woolworth the economies of scale and customer loyalty are the factors that reduce this threat for
the enterprise and can provide services and products to the customers in lower prices (Dobbs,
2014).
Second is the threat of substitutes, the substitutes are the goods that can be replaceable and can
reduce the market attractiveness. The best example of a substitute good would be coca cola and
apple juice. The substitute for Woolworth would be online retailing products, small-localized
stores in communities. However the threat of Substitute would be lower to medium as the need
fulfilled by Woolworths is not possible for other small store (woolworthsgroup, 2018).
The third is the bargaining power of suppliers, the supplier is important stakeholders for the
enterprise that will affect the profit margins of the company. In the case of a single or large
supplier of the company the bargaining power is with suppliers. In the case of Woolworths, there

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are large numbers of suppliers that make this force less influencing for Woolworths
(woolworthsgroup, 2019).
Forth is the bargaining power of buyers, this force includes the power in the hands of buyers. In
the case of Woolworths, this force is influencing the company largely. The reason being the
switching cost for the customer is not too high which makes the customers switch to another
departmental store if found lower prices at another brand.
The fifth is competition, this is the most relevant force including the competition in the industry
that is very high in case of Woolworths. The major competitors for Woolworths are Aldi’s,
Coles, Wal-Mart, and Amazon. Since they are very close competitors, the threat is very high for
the company (fin24, 2019).
Resource based view
A tool for understanding the resource-based view for the organization would be the VRIO
framework. This tool will analyse the resources of the organization that will be a stronger
competitive advantage for the company. Here VRIO stands for valuable, rare, imitable, and
organizational capabilities. The resources that are seems to be valuable for the organizational
business, rare which means that the competitors do not use those resources yet imitable which
means that the competitors won’t be able to copy those resources. In addition, an organizational
capability is used to measure the level that the company would able to harness rare, valuable, and
hard to imitate the organizational resource in the market area (Chatzoglou & Chatzoudes, 2018).
In the case of Woolworths, the resources that seem to be valuable to Woolworths are human
resources, distribution and logistics, marketing expertise capability, activities alignment, and

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leadership vision. The key resources of Woolworths found to be rare was the ability of the
company to attract talent in several markets, the supply chain network of Woolworths, and
customer loyalty. The resources that are found to be providing a very strong competitive
advantage to Woolworths are project execution track record, talent attraction ability of the
company, and leadership team of Woolworths (theaustralian, 2019).
Ansoff’s matrix strategy
Ansoff’s matrix is the strategic tool to analyse the competitive strategy of the company. These
include four major strategies to be followed by a company that would be most appropriate as per
the requirement. From the figure below, it can be said that the four major strategies depend on
two factors that are products and development and market that the company targets or willing to
target. The first strategy is market development that reflects that the company will target a new
market with existing products and services (Aksoy, 2018). For example, Woolworths had
adopted various pricing strategy to enter new marketing segments and adopted a new distribution
channel like online sales. The second strategy is market penetration, which includes targeting
existing market with existing products and services. For example, Woolworths enhance the
market share through various activities in Australia, Increase in sales promotions by
Woolworths. The third strategy is product development that includes targeting current market
that is Australia with new products. The best example of this strategy would be Apple, as the
company introduces a new phone every year for the same market. The last strategy is
diversification strategies that are targeting a new market with new products and services to offer.
For example, horizontal diversification like Woolworth entering another nation with new
products but related to the existing product line (woolworthsgroup, 2018).

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Figure 1: (Source: (Aksoy, 2018)
Conclusion
From the discussion it can be said that developing a strategy is a crucial aspect in an
organization, which includes analysing internal and external business environment. SWOT
analysis is analysing strength, weakness, opportunity and threat for a company to strategize in a
way to use the company’s strengths and to gain opportunities or overcome weakness and avoid
threats.
Porters five-force model is one of the external analysis tool used to analyse the industry and
development of the competitive strategy of the company. The five forces according to this tool
that will affect the strategy of the company include is the threat of new entrants, the threat of
substitutes, bargaining power of suppliers, bargaining power of buyers, and competition.
Other tools used in the report were a resource-based view, which includes the VRIO framework
and Ansoff’s matrix strategy that include four key strategies that were market development,
product development, market penetration, and differentiation strategy.

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Works Cited
Aksoy, S., 2018. Applying Ansoff’S Growth Strategy Matrix To Innovation Classification.
International Journal of Innovation Management, p.1850039.
Chatzoglou, P. & Chatzoudes, D., 2018. ). The role of firm-specific factors in the strategy-
performance relationship: Revisiting the resource-based view of the firm and the VRIO
framework. Management Research Review, p.46.
Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), p.32.
fin24, 2019. why-sa-consumers-are-most-satisfied-with-woolworths. [Online] Available at:
https://www.fin24.com/Companies/Retail/why-sa-consumers-are-most-satisfied-with-
woolworths-20170421.
Hunt, D. & Bicen, P., 2017. The FREE (Firm Resources and External Environment) Framework
as an Alternative to SWOT: An Abstract. In Academy of Marketing Science Annual Conference,
p.49.
theaustralian, 2019. woolworths-presents-an-emerging-opportunity-for-investors. [Online]
Available at: https://www.theaustralian.com.au/subscribe/news/1/?
sourceCode=TAWEB_WRE170_a_GGL&dest=https%3A%2F%2Fwww.theaustralian.com.au
%2Fbusiness%2Fwealth%2Fwoolworths-presents-an-emerging-opportunity-for-investors
%2Fnews-story%2F8f425fc52c622ee1ed3e3f4c00a4c47d&me.
woolworthsgroup, 2018. about us. [Online].

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woolworthsgroup, 2018. Our Businesses. [Online] Available at:
https://www.woolworthsgroup.com.au/page/about-us/our-brands/.
woolworthsgroup, 2018. Strategy and Objectives. [Online] Available at:
https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-and-objectives/.
woolworthsgroup, 2019. responsibile-sourcing. [Online] Available at:
https://www.woolworthsgroup.com.au/page/community-and-responsibility/group-responsibility/
responsibile-sourcing/.