A Comprehensive Analysis of Competitive Strategy for Fonterra Company

This report provides a comprehensive analysis of competitive strategies, focusing on Fonterra as a case study. It begins with an introduction to the importance of competitive strategies in understanding internal and external threats. The report then delves into PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors affecting Fonterra. Following this, it applies the Five Forces analysis to assess the company's strengths and market position, evaluating supplier power, buyer capacity, competitive rivalry, the threat of substitutes, and the potential for new entrants. Finally, the report utilizes SWOT analysis to assess Fonterra's internal strengths and weaknesses, and external opportunities and threats. The conclusion summarizes the benefits of these strategic tools for enhancing competitiveness and growth within the dairy industry. The report uses academic references to support its findings.

Running head: COMPETITIVE STRATEGY
Competitive Strategy
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
PESTLE analysis........................................................................................................................2
Five forces analysis....................................................................................................................3
SWOT analysis...........................................................................................................................4
Conclusion..................................................................................................................................5
Reference List............................................................................................................................6

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Introduction
The essay will be throwing insights on the different competitive strategy that needs to
be taken up by the organizations so that it can enable them in functioning in a proper manner.
It will also result in understanding the internal as well as the external threats that are present
to the organization so that it can be mitigated in a proper manner. This essay will be provide
insights regarding PESTLE analysis, SWOT analysis and the Five Forces analysis so that the
internal and the external environment can be measured in a proper manner. The essay will be
focussing on a company that is Fonterra so that it can help in providing better understanding
of the competitive tools.
PESTLE analysis
It is an important strategic tool that results in understanding the external environment
of the organization so that they can have a better idea regarding the conditions that are
present in the market before a product is being launched by them in the market. This analysis
is based on the Political Economic, Social, Technological, Legal and the Environmental
factors that the company needs to consider. The political factors will help the company in
understanding the rules and policies that are laid down by the government that Fonterra needs
to follow. This will result in increasing the innovation process for the company (Ho 2014).
The economic factors also need to be taken in to consideration by the company so that it can
help them in understanding the economy under which the company will be performing. It will
result in gaining a better understanding of the techniques that will enable the company in
increasing their level of profit within the market. The social factors will result in getting
better insights regarding the tastes and preferences of the customers that the company needs
to take in to account so that the level of profit for the company can increase to a great extent
(Iglinski et al. 2016).

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The technological factors will enable the company in understanding the level; of
technologies that are present in the market so that the process of innovation for the company
can increase to a great extent. It will enable the company in increasing its level of production
by keeping its cost of production at a lower level (Cinkota and Skuba 2014). The use of the
latest technologies will allow the company in gaining a competitive advantage in the market
over the rival companies. The legal factors need to be adhered by Fonterra so that the
company can run its operations by abiding to the regulations that are present so that the
company can work in an ethical way. The environmental factors also need to be taken in to
account by the company so that it can enable them in protecting the surrounding environment
where the company is carrying out its operations (Moro Visconti 2016).
Five forces analysis
This is a competitive strategy tool that will allow the company in evaluating the
strengths and the position of the company in the current market. It will also allow the
company in gaining better insights regarding the external environment where the operations
of the company are being carried out. The strength of the organization can be determined by
using this tool along with the position of the company in the market. The company will be
able to identify the ways through which the level of profit can be increased as well. The
supplier power needs to be understood in a better manner, as the suppliers create a great
impact on the daily functions of the company (Johnson 2016). They provide the raw materials
for the company, which is turned in to finished products and sold in the market. Fonterra
needs to analyse the power of the suppliers so that the decrease in the price of raw materials
can affect the pricing decisions of the company in appositive manner as well. The buying
capacity of the customers can also be determined with this tool, which will help the company
in understanding the impact that the buyers have in the market. It will enable the company in
analysing the cost of switch by the buyers to a different product along with the willingness of

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the customers in paying the price that is demanded by the organization (Wang, Yu and Zhang
2013).
The competitive rivalry will allow the company in understanding the role that
competitors have in deciding the price of the product. The competitors in the dairy industry
also manufactures the same products like Fonterra, which may hamper the level of profit for
the company. The competitiveness of the rivals will enable the company in understanding the
extent to which it can create an impact on the price of the product. The threat of substitutes
can also be analysed through this tool, which will help the company in understanding the cost
of switching over to the new products by the customers that are present in the market
(Johnson 2016). The evaluation of the substitute threat will result in developing the products
in a better manner so that the attractiveness of the product in the market can be increased to a
great extent. The entry of new companies in the market needs to be evaluated so that the rate
of profitability of the companies can be evaluated, which may create an impact on the
operations of the established companies (Fleisher and Bensoussan 2015).
SWOT analysis
The use of this tool will allow the company in assessing the strengths and weakness
that are present within the company with respect to its internal environment. The weaknesses
and threats can be overcome with the help of opportunities that will be identified through this
analytical tool. The strength that is present within the company will assess the core
competencies that are present within the organization so that it can be developed on a further
basis and the level of profit for the firm can be increased as well (Ng et al. 2013). It will also
allow the company in gaining a competitive advantage over the rival companies that are
present in the market. The weaknesses that will be identified through this tool needs to be
assessed so that it can be overcome and the company can gain a competitive advantage in the
market. The opportunities that are present within the company will result in increasing the

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level of efficiency within the organization so that the level of output can be increased as well
(Zakharova 2013). The opportunities will also provide an advantage to Fonterra within the
dairy industry over the other firms. The threats need to be evaluated in a proper manner so
that it can result in understanding the internal and the external threats that are present in the
organization. These threats need to be overcome so that the company can increase its level of
profit (Brooks, Heffner and Henderson 2014).
Conclusion
Thus it can be concluded that the use of the above mentioned tools will help the
company in understanding the internal and the external environment in a proper manner. It
will allow the company in increasing its level of competency in the market so that the
company can benefit by earning better level of profits. It will also enable the company in
understanding the opportunities that are present for growth within the market in which the
company is operating.

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Reference List
Brooks, G., Heffner, A. and Henderson, D., 2014. A SWOT analysis of competitive
knowledge from social media for a small start-up business. The Review of Business
Information Systems (Online), 18(1), p.23.
Czinkota, M.R. and Skuba, C.J., 2014. Contextual analysis of legal systems and their impact
on trade and foreign direct investment. Journal of Business Research, 67(10), pp.2207-2211.
Fleisher, C.S. and Bensoussan, B.E., 2015. Business and competitive analysis: effective
application of new and classic methods. FT Press.
Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European
academic research, 2(5), pp.6478-6492.
Igliński, B., Iglińska, A., Cichosz, M., Kujawski, W. and Buczkowski, R., 2016. Renewable
energy production in the Łódzkie Voivodeship. The PEST analysis of the RES in the
voivodeship and in Poland. Renewable and Sustainable Energy Reviews, 58, pp.737-750.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Moro Visconti, R., 2016. Healthcare public-private partnerships in Italy: Assessing risk
sharing and governance issues with PESTLE and SWOT analysis. Since empirical
considerations about Italy may be globally extended, even beyond the healthcare industry,
the audience of this study may conveniently widen well beyond its apparently narrow focus.
Ng, K.B., Leung, G.K., Johnston, J.M. and Cowling, B.J., 2013. Factors affecting
implementation of accreditation programmes and the impact of the accreditation process on
quality improvement in hospitals: a SWOT analysis. Hong Kong Medical Journal.

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Wang, K., Yu, S. and Zhang, W., 2013. China’s regional energy and environmental
efficiency: A DEA window analysis based dynamic evaluation. Mathematical and Computer
Modelling, 58(5-6), pp.1117-1127.
Zakharova, A.A., 2013. Fuzzy swot analysis for selection of bankruptcy risk factors.
In Applied Mechanics and Materials(Vol. 379, pp. 207-213). Trans Tech Publications.