Essay on Strategy Development Tools: HI6006 Competitive Strategy

This essay provides a comprehensive analysis of key strategy development tools, including the PESTEL framework, Porter's Five Forces model, and the Input/Output model, and how they are used in business to gain a competitive advantage. It begins by introducing the importance of competitive strategy and the need for organizations to develop relevant strategies for market success. The essay then delves into the background of Coca-Cola as a case study, illustrating the application of these strategic tools in a real-world context. Each framework is thoroughly examined, with detailed explanations of its components and their significance in analyzing the business environment. The PESTEL analysis covers political, economic, social, technological, environmental, and legal factors affecting Coca-Cola. Porter's Five Forces model assesses the threats of new entrants, bargaining power of buyers and suppliers, the threat of substitutes, and industry rivalry. The Input/Output model is analyzed to understand the interdependency technique in various economic branches, particularly concerning Coca-Cola's supply chain. The essay concludes that organizations must select the best strategic method to gain an advantage, acknowledging limitations and the need for situational adaptation while emphasizing the importance of these tools in understanding external threats and competition.

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

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COMPETITIVE STRATEGY
Introduction
For a business organisation to survive it needs to ensure that it develops relevant
strategies that can help it to secure a competitive advantage in the market. According to
Theaker (2017), a competitive strategy can help the organisations to gain an advantage in the
market by analysing the environment. This can provide an analysis of the competition as well
as the market so that relevant strategies for the satisfaction of customers and growth of sales
can be developed. The essay identifies the importance of using strategic tools such as Porter’s
five force analysis, PESTEL analysis and input/output theory that are relevant in the analysis
of the business market. Each of the theories has their own significance that plays a crucial
role in analysing the business competition in the market.
Background of the company
Coca Cola is a soft drink manufacturing company, which was introduced in 1886.
John Pemberton initially developed the company a patent medicine company. Coca Cola
attained global fame due to the marketing skills of Asa Giggs Candler. Coca Cola is one of
the most famous companies that exist in the beverage industry. Coca Cola is the third most
valuable brand after Apple and Google (Coca-colacompany.com 2018).
Concept of PESTEL framework
PESTEL framework is necessary for analysing the external environment factors that
cause hindrance in the business market. According to Lamas Leite et al. (2017), these
common external market factors can help in analysing the market and ensure that the
common threats are mitigated. The PESTEL framework is an acronym for six of the most
important and modern market elements that exist in a business environment. These elements
include political, economical, social, technological, environmental and legal.
Analysis of PESTEL framework
Political: The political factor consists of the interference of the Government. The
Government of a country need to ensure that a company does not provide any products that
can harm the safety of the people. In the case of Coca-Cola, the colours and flavours of the
products pose threat in the political factor of the product.
Economical: The economical factor is the most unpredictable factor for any business
organisation. This is mainly because of the fact that the economies of a nation fluctuates

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constantly. Thereby, it is important to conduct an analysis of this factor for the effectiveness
of business.
Social: The use of excess sugar for the manufacturing of the product may cause health
problems people in the society and make people suffer from diseases. Thus, this is considered
as an important health factor to be considered by Coca-Cola.
Technological: The technological advantage that the company can receive is centred
in the manufacturing of the products. The technological advantage received by Coca-Cola is
that the research and development of the company is updated and it helps in identifying any
flaws that may exist in the manufacturing process.
Environmental: According to Rothaermel (2015), conducting a sustainable business
is considered as a major issue in both political as well as environmental form. The
environment of a country need to be protected so that the company and the industry can
prosper under the society.
Legal: A company like Coca-Cola, it needs to ensure that it maintains the rules of the
law and the political government by adhering to the rules set by FDA. The use of plastic
bottles is not always acceptable in many countries because it causes problems in the drainage
of water (Porter and Heppelmann 2014).
Concept of Porter’s five-force framework
According to Dobbs (2014), the external analysis is important for organisations so
that it can analyse the immediate threats that exist in the market. The threats in the markets
are basically the common market and environmental factors that provide resistance to the
service of the organisation. In this regard, one such framework can be used to identify the
threats and competition that exist in a business. Michael Porter identified five forces that may
cause hindrance to the existence of a successful business. The five forces identified by Porter
helps to determine the competitive intensity and the attractiveness that can be gained in terms
of profitability and productivity in an organisation.
Analysis of Porter’s five-force framework
Threat of new entrants: According to Anton (2015), the threat of new entrants is low
for Coca-Cola and of the beverage industry. The reputation of Coca-Cola has made the

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company maintain its number one stature in the business world and consequently have
ensured that the company does not allow any other threat in the business market.
Bargaining power of buyers: The bargaining power of buyers is medium as the
customers may change its preferences. Coca-Cola need to ensure that the marketing mix
elements such as product, price and place of selling the products are maintained for
effectively conducting the business.
Bargaining power of suppliers: The bargaining power of suppliers also poses
medium threat as the company can get many suppliers to provide them with the required
ingredients. Thus, Coca-Cola does not have to be worried about the factors that may affect
the suppliers of the company.
Threat of substitutes: One of the biggest rival companies of Coca-Cola includes Pepsi
Cola. Pepsi Cola has been in the industry for a long time and it poses threat to Coca-Cola in
every aspect. Thus, it can be said that the threat of substitutes in high in the case of Coca-
Cola.
Industry rivalry: The industry rivalry, like Coca-Cola and Pepsi Cola pose high threat
to one another. The manners in which these two companies continue to be innovative and
implement strategies denote the intense rivalry that exists. Competition to be the best in the
industry is always a factor that intensifies rivalry in the companies.
Analysis of input/output model
According to Johnson (2016), the input/output method can be used to analyse the
interdependency technique in various economic branches. This includes the analysis of the
economic technique in national as well as the regional economy. This analysis is derived
from the application of the supply and demand curves that help an organisation to understand
the economic strength and with it make strategies that can mitigate the economic challenges
faced by the industry. One of the most approachable ways to conduct the business is by tying
the regions together that exist at the national level (Kuratko, Hornsby and Covin 2014). This
can help in analysing the intra-region, inter-industry transactions and the inter-region, intra-
industry transactions. An example can be provided that can help in understanding the model
in a more comprehensive manner.

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In the case of Coca-Cola, the company need to analyse the suppliers and the type of
ingredients that is provided to the company. The suppliers of Coca-Cola normally come from
various parts of the world in which the company is the number one drink. According to Zhao
(2016), the demand and supply of the company is depended on the suppliers and the manner
in which the suppliers can implement itself in the changing environment of the markets of
Coca-Cola. This can help Coca-Cola to continue its production in the competitive business
market.
Conclusion
Hence, it can be concluded that in order to gain a competitive advantage in the
market, organisations need to ensure that it selects the best strategic method to gain the
advantage. The application of the PESTEL analysis, Porter’s five-force model and
input/output model can be used to understand the external threats and competitions in the
market. However, certain limitations also exist in the application of the model as it sometimes
cannot be used for all-purpose and dependence on other models can be required to solve the
problems. Therefore, it is necessary that organisations use the approaches depending on the
situation and likewise take actions necessary for conducting business in the market.

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Reference
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