HI6006: Strategy Development Tools - PESTEL, SWOT, and Frameworks

This essay provides a comprehensive overview of strategy development tools, focusing on their application in business. It includes a SWOT analysis to understand strengths, weaknesses, opportunities, and threats, and a PESTLE analysis to examine political, economic, social, technological, environmental, and legal factors. The essay also utilizes Porter's Five Forces framework to assess industry competitiveness and discusses Porter's generic strategies for achieving competitive advantage. The analysis is applied to the Australian retail industry, concluding that these tools are essential for developing effective competitive strategies and achieving success in the market. Desklib provides students access to solved assignments and past papers.

Competitive Strategy

COMPETITIVE STRATEGY 1
Contents
Introduction...........................................................................................................................................2
Overview...............................................................................................................................................2
SWOT Analysis.....................................................................................................................................2
PESTLE Analysis..................................................................................................................................4
Porte’s Five Forces Framework.............................................................................................................5
Porters generic strategy.........................................................................................................................6
Conclusion.............................................................................................................................................6
References.............................................................................................................................................8

COMPETITIVE STRATEGY 2
Introduction
Competitive strategy defines the long term plan of the company in order to gain the
competitive advantage in the industry. Competitive strategy plays a very important role when
to create the defensive position in the market with the similar products (Evans, 2017). Before
developing the competitive strategy, the company has to evaluate all strength, weakness,
opportunity and threat in the industry. There are different business models which help to
evaluate the industry situation and develop the competitive strategies so that the company can
gain the competitive advantage. This report involves SWOT Analysis, PESTLE Analysis,
Ansoff Matrix and Porter’s Five Force Framework models to analyse the situation of
Australian retail industry.
Overview
Retail industry in Australia continues to maintain its momentum in the terms of economic and
social development. The industry expand the business at a CAGR of 2% over 2013-18. The
retail industry of Australia is a very flexible market. The growth of the industry is fluctuating
with the rate of ups and down. The overall size of Australia retail market is $122USD in
2013. In the Australia, the interest rate is low due to which the purchasing power of consumer
is high thus; the retail industry is growing continuously with the increasing rate (Mordor
intelligence, 2017).
SWOT Analysis
Swot analysis is a useful tool which helps to understand the strength and weaknesses of the
industry and also identify the opportunities and threat to expand the business. The analyses of
the industry are based on these four components such as strength, weakness, threat and
opportunity (Hashemi, and Samani, 2017).
Strength
It describes the qualities and features of the industry which makes it separate from the
competitors. Some of the strengths of the Retail industry of Australia are:
 The disposable income of the industry is rising continuously

COMPETITIVE STRATEGY 3
 The industry has the demographic favour
 The nature of industry can easily influence the consumers
 The greater availability of the goods and services
Weaknesses
It states the areas where the business needs to improve to gain the competitive advantage.
Some of the weaknesses are:
 The industry faces the policy related issues such as lack of industry status for retail.
 The industry has the inadequate human resources due to lack of training program.
 The industry has the underdeveloped the supply chain.
 Australia retail industry has the lack of basic infrastructure such as transport,
communication, and power.
Opportunity
The industry refers the favourable external factors which can use by the company to gain the
competitive advantage. There are some opportunities of the retail industry:
 Locational advantage
 Rural retail
 High investment
 E-retailing
 Retail franchising
 Wholesale trading
Threat
It refers the factors that have the capacity to harm the organisation (Shaw, 2017). The threats
of the retail industry are:
 Political issue
 Inflation
 Social issue
 Lack of differentiation among the malls that are coming

COMPETITIVE STRATEGY 4
PESTLE Analysis
PESTLE analysis is a tool which is used by industry to analyse and monitor the macro-
environmental factors. It helps to identify the threats and weakness of the industry.
Political Factors
It refers the degree in which the government and its policies affect the performance of the
industry. The government has revealed its influences in the retail industry of Australia, the
revenue and profitability of the industry are affected by the government policies. It is
necessary for the industry to follow the food regulation to provide the healthy products to the
consumers (Johnson, 2018).
Economic Factors
The economic condition of the country directly affects the profitability of the industry. The
retail industry was able to hold itself even during the recession. The country has the strongest
economy which influences the consumers to buy the product which increase the profitability
of the industry.
Social Factors
The social environment and developing trends affects the sale of the industry. In the retail
industry, people are enjoying the products in the bulk quantity. The stores promote the
product by advertisement to attract the customers.
Technological factors
The technological factor reflects the technological innovation rate and development in the
technologies that can influence the industry. In the retail industry, the stores are adopting the
new systems, software and hardware. Smaller stores are shifting from the computers to iPads
at the register. It helps to increases the revenue by reducing the cost and making the work
easy.
Environmental Factors
Environmental factors state the environment and ecological features which can affects the
product of the industry and activities of the industry affect the environment. In the retailing

COMPETITIVE STRATEGY 5
industry, the plastic bags have been used to pack the bulk material which harms the
environment. There are some stores have to pay the taxes for the fatty as per the regulation of
the government regarding the environment.
Legal Factors
It states the rules and regulation which develops by the government for the effective services.
These rules and regulation of the country affects the internal activities of the industry. The
retail industry needs to register themselves under the legislative conditions before opening the
shop.
Porte’s Five Forces Framework
It is a framework which is used by the industry to define the strength of rivalry and its level
of profitability (Dobbs, 2014). It contains the five forces which analyse the industry and these
are:
Bargaining Power of Consumers-
It states the negotiation power of consumers to buy the product. In Australian retail industry,
bargaining power of buyers is high due to high competition in the market.
Bargaining Power of suppliers -
It states the negotiation power of suppliers by selling the product in the industry. In the
Australian retail industry, the suppliers have less bargaining power due to large number of
suppliers in the industry.
Threat of Substitute-
It states the threat of similar products in the industry. The threat of substitute is high due to
large competition in the retail stores and selling the similar product in the market.
Threat of competitor
It states the degree of competition of the industry. The industry has high threat of the
competitors due to increasing the new entrants in the market.
Threat of New Entrants

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It states the threat of the new entrants in the industry. The retail industry of Australian has
high threat of new entrants due to less amount of capital (Edraw Soft, 2018).
Porters generic strategy
Porter’s generic strategy defines the strategy from which the industry can attain the
competitive advantage in its targeted area. It contains the threes strategy such as cost,
differentiation and Focus (Amadeo, 2018).
Cost strategy
The strategy states that the industry has to reduce the price and attracts the large number of
consumers. The prices of retail industry are low as compare to the others that is why the
demand of consumers is high towards the industry (Parnell, Long, and Lester, 2015).
Differentiation
It refers the different features of the product which makes it separate from the product. The
retail industry has to use this strategy because it offers the similar products.
Focus
This strategy focuses on both the strategies of the generic that is cost and differentiation. The
industry has to implement this strategy to attain the competitive advantage by using these
strategies.
Conclusion
From the above analysis, it has been concluded that the company can use these model to
develop the competitive strategies. The competitive strategies help the company to gain the
competitive advantage. The company can use the PESTLE Analysis, SWOT Analysis,
Porters Five Forces Framework and Porter’s Generic strategies to analyse the environment of
the industry. The Australian industry will achieve success in the near future by adopting the
competitive strategies.

COMPETITIVE STRATEGY 7
References
Amadeo, K. (2018) What Is Competitive Advantage? Three Strategies That Work [online].
Available from https://www.thebalance.com/what-is-competitive-advantage-3-strategies-that-
work-3305828 [Accessed 19/12/18].
Dobbs, M. E. (2014) Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45
Edraw Soft (2018) Porter's Five Forces Model Templates [online]. Available from
https://www.edrawsoft.com/fiveforcesmodel.php [Accessed 19/12/18].
Evans, A. (2017) The Importance Of Competitive Strategy [online]. Available from
https://www.linkedin.com/pulse/importance-competitive-strategy-achara-evans[Accessed
19/12/18.
Hashemi, S.M., and Samani, F.S. (2017) Strengths, Weaknesses, Opportunities and Threats
(SWOT) Analysis and Strategic Planning for Iranian Language Institutions Development.
Journal of Applied Linguistics and Language Research, 4(2), 139-149.
Johnson, H. (2018) Pestle Analysis Small Law Firm in the UK [online]. Available from
https://solvitonline.com/pestle-analysis-sample-small-law-firm/ [Accessed 19/12/18].
Mordor intelligence. (2017) Retail Industry in Australia – Segmented by Product (Food
Retail/Grocery, Apparel, Footwear, Beauty Products, Durable Goods, Furniture &
Furnishings, Hardware Stores), By Retail Store (Hypermarkets & Supermarkets,
Convenience Stores, Discounters Stores Homeshopping etc.) Trends, Growth and
Opportunities (2018 - 2023). [online]. Available from:
https://www.mordorintelligence.com/industry-reports/retail-industry-in-australia [Accessed
19/12/18].
Parnell, J.A., Long, Z. and Lester, D. (2015) Competitive strategy, capabilities and
uncertainty in small and medium sized enterprises (SMEs) in China and the United
States. Management Decision, 53(2), pp.402-431.

COMPETITIVE STRATEGY 8
Shaw, J. (2017) How to Complete a Personal SWOT Analysis [online]. Available from
https://medium.com/thrive-global/how-to-complete-a-personal-swot-analysis-2f8769aebd5e
[Accessed 19/12/18].