Analysis Strategies for Business Advantage

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13th Oct 2020 Business Assignment Reference this

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Introduction

Increasing competition has put every firm operating in the business market in pressure and in order to remain sustainable in the market they have to make use of unique competitive strategies in order to maintain their current position (Nithisathian et al., 2018). In this situation, organization considered business competitive strategies such as pestle, Ansoff matrix, SWOT analysis, Porter five forces as one of the major tools in the growth and survival of the organization. These models help them to explore the market and try to develop their unique strategy as per the current requirement.

PESTEL

Political factors

These aspects are linked with the fact to what extent the government of the particular country interferes in the business market. It includes all the ways by which government can control the business market such as trade policies, stability/instability of government, policies related to corporate tax, environment laws and restrictions laws related to investment (Kara, 2018). In addition, political elements have direct control over infrastructure and development of the country which are the basic requirements of the business. Example China political environment is stable and favourable for business; therefore, they have the highest foreign investment in their countries after US.

Economic Factors

These factors actually determine specific economy performances which are essential for the growth of every business such as economic growth, interest rates, exchange rates, and per capita income. These factors directly or indirectly have the capability to influence the growth of the business because these factors are directly linked with the purchasing power of the individual and therefore have the capability of changing the supply and demand structure (Song, Sun and Jin, 2017). Examples, China has the second-largest economy because of which purchasing power of their individuals is high as compared to other countries.

Social factors

This factor is linked with the general environment which includes demographic attributes, rules, culture, and belief of that particular community in which organization is operating. It mainly includes elements like growth rate of population, distribution of income, lifestyle characters, barrier related to culture and so on (Pan, Chen and Zhan, 2018). These elements play a very significant role in targeting customers because it is linked with the local market. Example US are very strict related to their social factors and it is compulsory for all investors to take care of these factors while doing business in US.

Technological factors

These factors are linked with the innovation in the field of technology which is considered as the backbone of the present industries. These factors basically decide the future of the firm while operating in a particular country because it helps the firm to remain competitive in the business market (Yüksel, 2012). In addition, these factors are considered as business decision making elements because they decide the success of the launch in a particular market. Innovation in technology helps the firm to remain risk-free for their business operations. Example US is considered as hub of technology which helps the organization to operate on cost-effective platform in the business market.

Environment factors

These factors are linked with the rise in the scarcity of raw materials, environmental risk and increase in green gases. It involves both ecological as well as environmental aspects which have a direct impact on industries like tourism, agriculture, and so on. Example US has introduced all the laws related to Paris agreement which focus on environment safety while doing business in US.

Legal factors

These factors are considered as overlapping of political factors but they include some specific key aspects such as antitrust laws, law related to consumer protection, law related to copyright and so on. These can be considered as corporate governance of that particular country in which organizations are going to operate. Example US Have very strict law related to copyright as well as antitrust law which ensure that right quality of the product is being circulated in their market.

Porters five force model

Threat of new entrants

Entering of new firm in the business market means entrance of new abilities and technologies to attain business market. In this situation, entrance depends on the seriousness of barrier created in the market. If barrier is high then chances of entering is limited and if barrier is low then changes of entry are more (Indiatsy et al., 2014). Barrier can be economies of scale or it can be innovation through R& D. Examples Apple organization is able to create a market barrier with the help of their innovative design which makes them market leader.

Bargaining power of suppliers

It explores the power control of supplier in the market by which they can regulate prices. Power control dependents on the number of suppliers available in the market for the organization. If supplier is high then power control of supplier is low and if Suppliers are limited then their bargaining power is high. Examples Nike organization is having a larger number of suppliers in their market because of which they can switch other supplier-related to prices which lower down supplier power.

Bargaining power of Buyers

This force is linked with the market of outputs because it is related to the exploration of ability of the customer to put pressure on the company to lower down price of their products. If customers are larger in number then they are capable of lower down the price of the product in the market which decreases the profit margin of the company (Renko et al., 2014). Availability of a larger number of companies provides them opportunity to switch the company related to the price factors. Example at present various airline service offers discounts on their services which helps customer to switch their preference as per the price.

Threat of substitute

Currently market is facing a new type of trend in which if the price related to some product increases, people do not hesitate in switching to a similar kind of product which is also known as substitutes. In this situation, marketer is in pressure to offer such price in the market which will help them to develop a loyal customer. Example if Star bug increases the price of their coffee, then individual surely prefer to take coffee from Nescafe.

Rivalry within industry

It explores the rivalry with in the industry related to the market place and is completely dependent on the number of existing player and their ability to capture a major portion of market share. Rivalry increase when there is a larger number of companies fighting for the same market share and in this situation, companies have to invest a huge amount in promotional activities in order to survive in the market. Example Airline industries in UK are working in high competition and therefore they spend a huge amount of money in their promotional activities in order to position their image in customer mind.

Ansoff matrix

This business strategy has four stages in its process.

Market penetration

First stage includes aspects related to market penetration and is usually used by the organization when they already have an existing product in the market when is in need of growth. One of the best examples is telecom industry which consists of many companies and in order to survive in this market, company has to adopt a unique business strategy to remain at the top of the market (Gurcaylilar-Yenidogan and Aksoy, 2018). In this stage, Vodafone organization focus is on increasing the market share with the help of innovative strategy.

Market development

This is considered as second stage of market growth in which organization tries to develop a new market with their existing product. One of the best example is footwear industry in which companies like Adidas, Nike and Puma have an established market but still they enter in to international market in order to expand their business market because they believe that having a large customer base will ensure their growth and revenue which is the backbone of survival in this business competition.

Product development

In this stage, the organization tries to introduce their new product in the existing market in which they are already operating in order to increase their market growth. This kind of strategy is being used by the organization when they feel that their existing product has reached saturation point and cannot move further (Filippov, 2017). Therefore, they prefer to introduce a new product in their existing market. One of the best examples is Apple which introduce their new product in their existing market.

Diversification

In this stage, organization tries to introduce a new product in a completely new market in order to explore business environment. One of the best examples is Samsung Company which understand the present market need and tries to explore the new market opportunities in the form of insurances, retail and so on. They have also entered into the new world of smart electronic which includes smart curtains, switches, TV and other smart products.

Conclusion

Every organization wants to remain at the top of the market in order to attain the major share of the market which ensures their maximum profit margin. In this situation, organization makes use of every competitive strategy which can offer them the necessary competitiveness over other organizations present in the business market. This helps them to maintain a strong customer base which is directly linked with the sales and profit margin.

References

  1. Nithisathian, K., Wall, W.P., Thanitnan, C. and Ponwiritthon, R. (2018) Maintaining Indispensable Competitive Advantage: Corporate Strategy for 21st Century. RMUTL Journal of Business Administration and Liberal Arts, 6(1), pp.11-24.
  2. Song, J., Sun, Y. and Jin, L. (2017) PESTEL analysis of the development of the waste-to-energy incineration industry in China. Renewable and Sustainable Energy Reviews, 80, pp.276-289.
  3. Kara, E. (2018) A Contemporary Approach for Strategic Management in Tourism Sector: PESTEL Analysis on The City Muğla, Turkey. İşletme Araştırmaları Dergisi, 10(2), pp.598-608.
  4. Pan, W., Chen, L. and Zhan, W. (2018) PESTEL analysis of construction productivity enhancement strategies: A case study of three economies. Journal of Management in Engineering, 35(1), p.05018013.
  5. Yüksel, I. (2012) Developing a multi-criteria decision-making model for PESTEL analysis. International Journal of Business and Management, 7(24), p.52.
  6. Indiatsy, C.M., Mwangi, M.S., Mandere, E.N., Bichanga, J.M. and George, G.E. (2014) The application of Porter's five forces model on organization performance: A case of cooperative bank of Kenya Ltd. European Journal of Business and Management, 6(16), pp.75-85.
  7. Renko, N., Sustic, I. and Butigan, R. (2011) Designing marketing strategy using the five competitive forces model by michael e. Porter-Case of Small Bakery in Croatia. International journal of management cases, 13(3), pp.376-385.
  8. Gurcaylilar-Yenidogan, T. and Aksoy, S. (2018) Applying Ansoff'S Growth Strategy Matrix to Innovation Classification. International Journal of Innovation Management, 22(04), p.1850039.
  9. Filippov, D.V. (2017) Positioning of the Organization in the Target Markets Using the Modified Three-Dimensional Matrix Model on the Example of Transport Education Market of the Republic of Sakha (Yakutia) of the Russian Federation. Advanced Science Letters, 23(10), pp.9861-9865.

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