Analyzing Competitive Strategies: A Business Report

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COMPETITIVE STRATEGY
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Contents
Introduction................................................................................................................................................3
SWOT Analysis.........................................................................................................................................4
PESTLE ANALYSIS.................................................................................................................................6
Five Forces................................................................................................................................................8
Conclusion...............................................................................................................................................10
References..............................................................................................................................................11
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Introduction
Businesses today are focusing more on how to increase their success rate in the market
by applying different strategy tools. The most used tools are SWOT analysis, Porter’s
Five Forces and PESTLE analysis. All of these strategies help in identifying what are
the strategies that can be used by organisation to improve in the market. The example
of Woolworths, a supermarket chain, will be used to see how Porter’s five forces are
used. Tesco, a retailer of merchandise, will be used to see how SWOT analysis benefits
it. And lastly the example of Aldi, also a supermarket chain, will be taken to show how
PESTLE analysis can help it develop in the future.
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SWOT Analysis
SWOT analysis is used by businesses around the world in order to conduct and self-
analysis. This is done in order to identify what the internal strengths and weaknesses
are present in a business. It also helps in identifying what are the opportunities and
threats present in the market which will have both positive and negative effects on a
business. All of these points often help an organisation to achieve success in its field.
Here are the major factors that are involved in SWOT analysis.
The strengths of business help in finding out what are the strong points of a business.
By seeing the organisation can see what feature it has that will make it prominent or
unique in the market hence providing a competitive edge. Weaknesses help the
business in seeing where the changes are needed in order to succeed. These
weaknesses should be improved quickly so that the organisation does not fall behind in
the market. This factor needs to be addressed in such a way that it does not become a
problem for the business (Gürel, & Tat, 2017).
Opportunities are the factors in which a business can realise openings are present in
the market that it could tap into. The opportunities need to be seen before they arise my
properly analysing the market so that they are taken over before the competition starts
to implement them. Threats are one of the major factors that need to be looked out by
businesses. If this is not done then they will cause problems for it. Threats are often
considered to be risks that are mostly caused by external issues which have a direct
impact on the organisation.
This model can be comprehended in a better manner by looking at the example of
TESCO:
Strengths
 One of the most profitable
organisations in the world in the
retail sector.
 Customer service is excellent hence
Weaknesses
 Too much of the competition has
led to price wars hence decreasing
the level of profits.
 Market research is not being done
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having good customer satisfaction.
 Diversification of customers
according to needs (Fatricia, 2017.).
in a proper manner due to which
new market entrances are failing.
Opportunities
 Growth in online shopping so as to
attract more customers.
 Can have easy joint venture in new
countries were underperformance is
occurring.
 New trends in-home delivery
services.
Threats
 Brexit has caused the business to
slow down.
 New wage policies in England
cause expenses to increase.
 The rise in food prices limits to what
the customer can and cannot buy.
From this, it can be seen that both the opportunities and threats are caused by external
factors. On the other hand strengths and weaknesses are caused by both internal and
external factors. This SWOT analysis can allow the organisation to see where it needs
improvement and how it can succeed in the future.
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PESTLE ANALYSIS
PESTLE analysis is used in seeing what the future of the organisation is. It helps in
identifying factors like political, economy, social, technological, law and environment. By
analysing all of these factors a business will be able to plan out what they will be doing
in the future in order to achieve success. The five factors are defined for a better
understanding.
The political factor mostly may involved about the political state of the country. This
refers to the fact that if there are political wars or a certain politic party will lead in the
future then what effect would it have on the business. The economy factor mostly
deals with aspects like inflation rate or unemployment rate which have a direct effect on
businesses. This needs to be seen so that the supply and demand of products or
services can be addressed to.
Social factors are mostly linked with the customers. This means that the cultural
aspects of the shopping behaviour of the customer need to be studied so that proper
products are made according to their needs. The technological factor will deal with
what are the new technologies that are being introduced in the market that will help in
improving the work being done in an organisation. There are more and more
technological developments being made as the world is becoming more technology-
dependent (Aithal, 2016).
The legal factor takes a deeper take on laws such as labor laws, discrimination laws or
consumer protection. This factor makes sure that no business is illegally operating. The
environmental factor deals with the fact that the products or services should be
environmentally friendly.
This strategy that is adopted by Aldi and it has decided how to operate in the future
according to it. The political factor that Aldi was faced with was that Britain’s decision
to leave the European Union. There was a commotion that this may lead to political
wars but nothing of such a thing happened and all was handled well. The rise in inflation
was high in the UK which meant that the economy would want cheaper products than
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before. Also, in the year 2017 market growth was seen due to which demand in
products increased. In the social factor, Aldi is taking a step to provide free teaching to
children across the UK. The increasing online product on the website of Aldi shows how
it is adopting technology into its operational processes. It is buying products form
farmers hence showing that it is contributing towards the environment. The products in
Aldi have faced legal regulations being that they are not hygienic (Fernie et. al. 2015).
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Five Forces
Porter’s Five Forces are yet another strategic tool that can help businesses with
competition in the market. To get a better understading of how this model helps in
achieving success over the competition the five forces must be seen. One of the forces
is to see the competition in the industry. This would help in attaining a better
understanding of what the strategies are that are used by the competitors. Another
factor is to see whether it is easy to get into the market by new entrants in which the
industry operates in. If it so then the competition would be on the rise in the industry
hence affecting the strategy which is used (Takata, 2016).
The power of supplier is another force which needs to be determined by businesses as
they are the ones which may increase the price of their unit products. The businesses
would have to see which supplier is giving then the best price. The power of customers
refers to the fact of how the customers have the power to either increase the rate of
prices or decrease them. If a business does not have that much of customers then its
prices would not be that high and if it does then the price would be kept moderate. The
threat of substitutes is a high risk for businesses as it may drive their sales down. This
may also cause the level of customers to decline as they may think it is the same
product of the organisation while it is not.
Businesses need to take all of these five forces into consideration so that the
competition in the market can be thoroughly analysed. This can be best seen through
the example of Woolworth. The risk of new entries is high in the market as there are
new processes that are being used hence putting pressure on the organisation. The
organisation handles this by introducing new and unique products into the market.
Woolworths is a renowned organisation in the UK and any supplier would not want to
detach itself from it, so the bargaining power of suppliers is low Woolworths has a high
customer base and need to keep it happy thus it needs to keep providing discounts on
its products so to retain the buyers. Price wars are common in the industry but
Woolworths still stays on the top of its competitors. The needs of the customer need to
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be understood so that a substitute product does not gain that much of hype (Ahmad,
2019).
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Conclusion
From this, it can be identified that the use of different strategy development tools can be
used in order to see how to achieve growth in the market. In conclusion, it can be said
that proper research and analysis needs to be done in order to achieve development in
a market. Businesses need to make sure to use the best strategy analysis that best fits
their business structure.
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References
1. Ahmad, S.M., 2019. Market Research: Demand & Business Models for an Online
Grocery Shopping service in Porvoo.
2. Aithal, P.S., 2016. Study on ABCD analysis technique for business models,
business strategies, operating concepts & business systems. International
Journal in Management and Social Science, 4(1).
3. Fatricia, R.S., 2017. STRATEGIC ANALYSIS OF TESCO
SUPERMARKET. Jurnal Manajemen Terapan dan Keuangan, 6(02), pp.69-86.
4. Fernie, J., Fernie, S. and Moore, C., 2015. Principles of retailing. Routledge.
5. Griffin, S., Sarfraz, M., Farida, V., Nasim, M.J., Ebokaiwe, A.P., Keck, C.M. and
Jacob, C., 2018. No time to waste organic waste: Nanosizing converts remains of
food processing into refined materials. Journal of environmental
management, 210, pp.114-121.
6. Gürel, E. and Tat, M., 2017. SWOT analysis: A theoretical review. Journal of
International Social Research, 10(51).
7. Takata, H., 2016. Effects of industry forces, market orientation, and marketing
capabilities on business performance: An empirical analysis of Japanese
manufacturers from 2009 to 2011. Journal of Business Research, 69(12),
pp.5611-5619.
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