HI6006 Competitive Strategy: Strategic Tools and Business Applications

This essay analyzes three key strategic tools: PESTEL analysis, SWOT analysis, and the resource-based view (VRIO framework), with applications to real-world businesses. The essay begins by examining Wesfarmers through a PESTEL analysis, assessing its political, economic, social, technological, environmental, and legal factors. Next, it applies a SWOT analysis to Zara, evaluating its strengths, weaknesses, opportunities, and threats. Finally, the essay uses the VRIO framework to evaluate Amazon Kindle's resources, determining their value, rarity, imitability, and organization. The essay concludes by highlighting the importance of these strategic tools for competitive advantage and effective decision-making in the business environment. The analysis provides insights into how these tools can be used to understand the internal and external environments of companies, develop competitive strategies, and achieve sustainable success.

RUNNING HEAD: COMPETITIVE STRATEGY 0
Competitive Strategy
Student’s Details
8/18/2019

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Introduction
Strategic development tools are essential for making strategic plans and gaining
competitive advantage from the competitors (Jarratt & Stiles, 2010). These tools enable
the company in strategic planning for the purpose of achieving effectiveness in the
company (Waas, et al., 2014). Here, the essay discusses the strategic tools such as
PESTEL analysis, SWOT Analysis and resource-based view by taking example of
Wesfarmers, Zara and Amazon kindle. These models are helpful in analyzing the
capabilities of the organizations and making strategies to beat the competitors.
PESTEL Analysis of Wesfarmers
PESTEL Analysis is considered to be an effective tool to be used by the companies to
overlook the macro-environmental factors present in the external environment which
have influence on the productivity of the company and also the results of this analysis
can be used to evaluate the threats and weaknesses that the company can face from
the external environmental factors (Issa & Chang, 2010). PESTEL Analysis of
Wesfarmers is as below:
Political Factors
As Wesfarmers is an Australian retailing company, the company can be impacted by the
bureaucratic interferences into the industry. Political stability, legal framework and the
level of corruption have impact on the productivity of the company which can be either
positively and negatively. Similarly, Wesfarmers faces major issues due to trade
regulations and anti-trust laws for the retailing industry.
Economic Factors
The economic system of the country, inflation rates, education level and economic
growth are the major economic factors that have influence on the operations of the
company (K, 2018). Similarly, Wesfarmers faces strategic issues due to changes in the
economic structure and fluctuations in exchange rates which has major impact on the
financial performance of the company.

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Social Factors
Culture, attitude, behavior and the social values have impact on the company. Due to
rapid changes in the social trends and changing buying patterns of the consumers, the
companies face issues in making strategies (Emmer, 2018). Similarly, Wesfarmers
these social factors play a great role in the performance of the company as the
company has to adhere with the societal needs and have to be cautious with the
marketing messages in order to ensure that it is hurting sentiments of society.
Technological Factors
There are various innovations that are made in respect to technology and the impact of
these technological changes can either disrupt the industry or can take company ahead
(Lead, 2012). However, various recent technological developments are made by
Wesfarmers in order to overcome the competitors. These technological developments
have helped the company to innovate their product mechanism and processes.
Environmental factors
Different industries have different liability and environment laws that could impact the
profitability of the organization. Due to changes in the climate, policies regarding the
environment and pollution related regulations have impact on the organization
(Babatunde & Adebisi, 2012). Similarly, the profits of the Wesfarmers have decreased
due to climatic changes which has brought changes in the buying patterns of the
consumers.
Legal Factors
Legal factors determine the laws and regulations pertaining to the industry and also the
legal framework and legislative policies and standards of the government that the
organization has to adhere. However, Wesfarmers has faced strategic issues due to
non-compliance with the standards and regulations regarding their grocery products.
Also, the company’s sales are affected due to the changes in the policy structure
relating to the retailing industry (Wesfarmers Limited, 2018).

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SWOT Analysis of Zara
SWOT Analysis is considered to be an effective strategic development model or tool
that is used by the organizations to analyze the strengths and discover the opportunities
in order to make proper strategies for overcoming the weaknesses and threats of the
company (Helms & Nixon, 2010). SWOT Analysis of Zara is discussed as below:
Strength
Strength of a company determines the capabilities and resources that it can use against
the competitors. However, Zara has many strengths which makes it different from all the
competitors. One of the biggest strengths of Zara is their unique designs and the
clothes of the Zara brand are elegant and of superior quality. Zara a strong presence in
the market as it has 6500 stores in 88 countries around the world and have expanded
well (Success Story, 2018). Zara has a brand value and because of which it has huge
customer base.
Weakness
Weaknesses of the company can stop the profits and it is the area where the company
will have to make improvements in order to achieve higher turnover and remain
competitive in the market (Coman & Ronen, 2009). Similarly, Zara has certain
weaknesses such as it generalized collection for the customers as there is lack of
varieties in Zara. The company does not use advertising to make aware about their
products to the customers. Zara has lack of safety stock as the company wants the
customers to walk into the stores for the latest patterns but the same can be a
disadvantage as the company can lose their potential customers.
Opportunity
Opportunity is referred to as the factors that are external ton the business but can give
competitive advantage. Similarly, Zara has an opportunity of selling their latest
collection online which has higher accessibility and also have the opportunity to make
an increase in the sales. Zara is a popular brand and is growing day by day which has
led to the increase in the market demand. It is considered as status symbol by the
customers which creates the need of growing market potential by the Zara.

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Threats
Threats are the negative factors that can cause harm to the organization and thereby
proper strategies are adopted by the organizations to overcome the threats (Bull, et al.,
2016). However, Zara faces the threat of competition. Zara is not the only clothing brand
in the market, it has competitors as well who have maintained the level of quality. This
can affect the profit margin of the Zara. Although Zara has huge market in many
countries but it has failed to maintain the tremendous growth in the reach. It can also be
noted that the market where is no store of Zara, it can not only affect the brand equity of
Zara but can also lead to loosing of the potential customers.
Resource Based View of Amazon
Resource based View is a strategic approach used for utilizing the resources of the
company in order to achieve sustainable competitive advantage (Kraaijenbrink, et al.,
2010). In the making of this analysis, the resources of the company must have attributes
VRIO framework which specifies whether the internal resources are capable in getting
competitive advantage. The VRIO framework of Amazon kindle is as discussed below:
Valuable
A resource is considered valuable when it adds value to the customers and have the
capability of exploiting opportunities in order to gain competitive advantage (Bresser &
Powalla, 2012). It can also be noted that if the resource is not valuable then it can
create competitive disadvantage. Similarly, the valuable resources of Amazon are their
diversified products which can create competitive advantage. However, kindle is an
electronic device that is available on Amazon and it has global presence which makes it
valuable.
Rare
A resource is rare when it is rarely available and is possessed by very few companies
and can develop temporary competitive advantage. Amazon has internal partnerships
and also has extensive delivery in domestic as well as regional areas. However,
Amazon kindle is the rare product of the company as it is exclusively available on

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Amazon. Apart from this, Amazon has brand value and considerable history in terms of
e-commerce.
Costly to imitate
Making the product valuable and rare creates temporary competitive advantage. Thus,
for achieving sustainable competitive advantage, it is important that the companies
come up with the products that are difficult to imitate (Kraaijenbrink, et al., 2010).
Similarly, Amazon has the brand equity and artificial intelligence capabilities that are
difficult to imitate and creates competitive advantage over the competitors. Amazon’
product kindle is a unique product which is difficult to imitate and has cost involved in
imitating and there is no substitute for that product by the rival companies.
Organized
The resources of the company can create competitive advantage if the resources are
organized in terms of policies, structures, processes and systems in order to analyze
the potential of valuable, rare and costly to imitate resources and capabilities. Similarly,
Amazon has organized systems for reaching the international market and has strong
organized distribution network across the globe. Amazon kindle has the potential to be
valuable, rare, and costly to imitate and has organized approach for reaching the target
audience.
Conclusion
To conclude, it can be said that there is great significance of strategic tools that
provides a descriptive way and an overall analysis of making competitive strategy.
There are several models and tools that are used by the companies to make an
analysis of internal and external environment for analyzing the strengths and
opportunities and making competitive strategies to avoid threats and weaknesses and
remain competitive in the market. Here, the essay discusses the PESTEL analysis of
Wesfarmers, SWOT analysis of Zara and a Resource Based View of Amazon kindle
through VRIO framework.

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References
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