SWOT analysis
In order to operate in the current competitive business scenario, it is important for the business organizations to properly evaluate the internal and external business factors. Moreover, as the current market state of affairs are rapidly changing, it is becoming more urgent for the business organizations to take the help of different tools of strategic management to stay at par to the market trend (Eden and Ackermann 2013). Strategic management tools are having different types ranging from internal factors determination tools to external factors. Based on different situations, organizations initiate appropriate strategic management tools. In this essay, four popular tools of strategic management will be discussed along with practical examples.
SWOT analysis is a commonly used and popular strategic management tool. This tool is mainly used for determining the internal business factors of a certain organization. For instance, Qantas can use SWOT analysis to identify their internal effectiveness. The first factor of SWOT analysis is strength that denotes the areas where Qantas is ahead than their competitors. Identification of all these factors will help them to maintain their advantages in the long term (Yuan 2013). The element of the SWOT analysis is weaknesses that denote the areas where Qantas is behind the competitors. Identification of these areas will help them to evaluate the areas of improvement and overcoming them in the long term. The next factor is opportunities that denote the potential positive factors, which can help Qantas in enhancing their business. Identification of these areas will help Qantas to design their strategies accordingly and achieve all the identified elements (Xingang, Jiaoli and Bei 2013). The last factor of the SWOT analysis is threats. This refers to the potential negative factors that may get emerged in the future and will affect the business of Qantas. Therefore, it can be concluded that SWOT analysis can be beneficial for the business organizations such as Qantas in identifying the negative and positive factors from their internal contexts. The identified factors can help the business organizations in designing and initiating their business strategies that will help them in overcoming the negative factors and achieving the positive factors in the long term.
Ansoff matrix is another commonly used tool in the current business scenario. The objective of using this tool is to identify different potential strategies in entering new markets. According to this tool, there are four ways by which the business organizations can increase their market share both in the existing market as well as in the new markets (Fejza and Asllani 2013). The first element of Ansoff’s matrix is market penetration that refers to the process of initiating newer variants of the existing products in the existing market. Unilever is having their consumer goods division in Australia and market penetration strategy can help them in coming out with more variants in terms of flavors, sizes, price and taste of their existing products in the Australian market. This can help them to target larger customer segments in the existing market and can increase their market share and sales volume. The next factor of this tool is product development (Khan et al. 2013). This refers to the process of initiating new product development to have newer products in the existing market. Under this approach, Unilever can introduce new products that they do not have currently in the Australian market. For instance, they can come up with new sanitary product brand in the market to cater to more customer segments. This will also increase their market share and will increase their sales volume.
Ansoff matrix
The next factor is market development and it refers to the process of entering in the new markets with the help of existing products (Wei, Yi and Guo 2014). Unilever can target a new country where currently they are not having their presence with the products they are selling in Australia. Thus, it will help them to have larger market for their existing products and this will increase the sales volume for them. The last factor of this tool is diversification that denotes that Unilever can introduce new products for a new market. For instance, if the new target market for Unilever is having different taste and preference pattern than that of Australia, then they have to introduce new markets according to the new target market. This will help Unilever to have diverse set of customers in different markets.
Porter five forces are mainly used in analyzing the industry competitiveness of a particular sector. In this tool, there are mainly five forces given that help the organizations in determining the industry competitiveness (Murphy 2016). The first force is bargaining power of the buyers. It refers to the upper hand enjoyed by the buyers in the market in bargaining price. Coles is a leading retail chain in Australia with having large number of competitors. In case of Coles, determination of bargaining power of the buyers will help them to analyze their competitiveness in bargaining with the end customers (Gai and Steenkamp 2014). The next factor is bargaining power of the suppliers and this force will help Coles to have the understanding about the upper hand they will enjoy in dealing with the suppliers and the influence of the suppliers in determining the pricing strategy. The next factor is threat of substitute that denotes the challenges Coles is facing from their substitutes such as Woolworths and Aldi. This will help the in evaluating the intensity of the threat. The next force is threat of new entrants (Srivastava, Franklin and Martinette 2013). This denotes the extent of probability of emergence of new competitors in the market and to how much this will affect the profitability of Coles. The last factor is competitive rivalry. This denotes the intensity of the rivalry present in the industry where Coles is operating. Thus, Porter five forces will help Coles to design their business strategies in accordance to their competitiveness in the industry.
This tool states the three ways of gaining competitive advantages from the market. The first way is cost leadership. This strategy can help Fonterra in providing their dairy products in lowest price in the market by means of cost cutting techniques and reducing profitability. This will help them to have access to larger section of customers over their rivals. The next strategy is product differentiation (Teeratansirikool et al. 2013). This will help Fonterra in introducing products in the market that are distinctive in nature and will not have any close competitors. This will enable Fonterra to gain competitive advantages in the market. The last strategy is market focus. This can help Fonterra to focus on a single customer segment and offer products according to their specific taste and preference pattern. Their products will then meet the customer requirement effectively and will eventually gain competitiveness in the market. Thus, initiation of Porter generic strategies will help Fonterra to have more options of how to gain competitive advantages from the market.
Conclusion
Thus, this essay concludes that strategic management tools are having number of utilities and benefits for the business organizations. There are number of practical examples discussed in this essay and it is identified that use of strategic management tools is important for the business organizations to gain competitive edge in the market. In this essay, SWOT, Porter generic strategies, porter five forces and ansoff’s matrix are being discussed along with their respective benefits.
Reference
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.
Fejza, E. and Asllani, A., 2013. The importance of marketing in helping companies with their growth strategies: The case of food industry in Kosovo. European Scientific Journal, ESJ, 9(16).
Gai, K. and Steenkamp, A., 2014. A feasibility study of Platform-as-a-Service using cloud computing for a global service organization. Journal of Information Systems Applied Research, 7(3), p.28.
Khan, M.S., Al-Ashaab, A., Shehab, E., Haque, B., Ewers, P., Sorli, M. and Sopelana, A., 2013. Towards lean product and process development. International Journal of Computer Integrated Manufacturing, 26(12), pp.1105-1116.
Murphy, C., 2016. Competitive Intelligence: Gathering, Analysing and Putting it to Work. Routledge.
Srivastava, M., Franklin, A. and Martinette, L., 2013. Building a sustainable competitive advantage. Journal of technology management & innovation, 8(2), pp.47-60.
Teeratansirikool, L., Siengthai, S., Badir, Y. and Charoenngam, C., 2013. Competitive strategies and firm performance: the mediating role of performance measurement. International Journal of Productivity and Performance Management, 62(2), pp.168-184.
Wei, Z., Yi, Y. and Guo, H., 2014. Organizational learning ambidexterity, strategic flexibility, and new product development. Journal of Product Innovation Management, 31(4), pp.832-847.
Xingang, Z., Jiaoli, K. and Bei, L., 2013. Focus on the development of shale gas in China—Based on SWOT analysis. Renewable and Sustainable Energy Reviews, 21, pp.603-613.
Yuan, H., 2013. A SWOT analysis of successful construction waste management. Journal of Cleaner Production, 39, pp.1-8.
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