Competitive Strategy: Analysis Of Two Companies In Different Industries In Australia

Practical application examples

Contemporary organisations have to face various uncertainties and market changes for which the management try to access its performance at regular interval of business course. Development tools can be defined as techniques that are utilised by management to ensure competitive advantage in every organisational activity to provide best decision making and predictions for future performances (Anna, 2015). This essay will analyse two of the most significant development tools used immensely by contemporary organisations while making internal and external assessment and gaining information about organisation’s competitive position.

SWOT analysis is a development tool that is used by managements to formulate organisation’s strategic planning and strategic management. It helps in building organisational strategy effectively and gives base for determining firm’s competitive strategies (Gurel & Tat, 2017). Nestle is one of the most prominent brands dealing in dairy and food products worldwide including Australia, America, Asia and European countries (Nestlé, 2018).

1. Strength: SWOT analysis of Nestle reveals that the company recognises many strengths that allows Nestle in development of core capabilities and resources along with gaining competitive edge. The strong market recognition along with brand image has gained consumer loyalty to a great extent. Furthermore, the company itself is involved in corporate social responsibility that heightens firm’s image for following sustainability strategies that is aligned with consumers expectations.
2. Weakness:  One core weakness can be seen in some of the Nestle’s products that shows less healthier food like sweets and chocolates containing artificial sweeteners. Even, food and dairy related factors remains highly dependent on advertisement to gain customer attraction and drive everyday sales that can lead Nestle to higher marketing and advertisement costs.
3. Opportunity: Since the firm gives value to internationalisation and shows developmental capabilities, opportunity lays in front of the company particularly in countries that have emerging economies. Due to growth in online marketing and sales, Nestle can increase its distributor partners by collaborating with online sites like Amazon and eBay to drive high sales.
4. Threats: Threats seen for the company is arising competition due to which the company have to constantly make changes in its pricing and other strategic choices( Varma & Ravi, 2017). The change in lifestyle of people where they have become suspicious about packaged food gives additional threat to the company.

To determine successful selection of strategies and business-related decisions, examining internal and external environment of GlaxoSmithKline through SWOT analysis will prove significant as it helps in balancing organisation’s internal strengths and weakness against environmental threats and opportunities ( Osita, et al., 2014).GlaxoSmithKline (GSK) is a firm dealing in bio-chemistry i.e. pharmaceutical and chemical industry in Australia.

1. Strengths: The company is financially very strong along with gaining huge availability of resources that gives GSK strong marketing and sales activities adding to the company strengths(GSK Australia, 2017).
2. Weakness: Weaknesses can be been seen in its internal environment like issues found in few of its manufactured drugs along with failures in dealing with required expectations. While meeting high consumer demands, the company have released its expired batches that had made numerous controversies regarding GSK products.
3. Opportunities: Opportunities like entering into oncology and biological market along with antibodies specialists lays in front of GSK that can build strong market recognition and increased cash flow for the company.
4. Threat: Risk related to unsuccessful products and inadequate awareness among consumers constitutes threats for the company. Along with it, GSK have to face many legal and environmental constraints while dealing with highly saturated chemical and drugs(GlaxoSmithKline Australia Pty Ltd., 2018).

Competition have always proved critical force for organisations while performing organisational activities regardless the industry they belong to (Indiatsy, et al., 2014). Although there are many development tools present in literature, most of the researchers and authors prefer five forces analysis model since it is perceived to be the best for analysing competitive environment of the firms ( Omsa, et al., 2017).

1. Threats of new entrants: Making Five force analysis of Nestle shows that threat from entrants in dairy and food related products seems relatively weaker force as consumers prefer selecting renowned and prominent brands for dairy and food products. Even the market remains restricted for new entrants since Nestle has been present in Australian market from a long time.
2. Threat of substitute products: This shows a strong force since there are lots of brands available in market who offers similar products like that of Nestle. Nevertheless, a recent innovative step taken by the company where in all the products of Nestle, wellness and health conscious factor have been implemented that made the company go beyond all the substitute products available in the market.
3. Suppliers bargaining power: Nestle have maintained strong relationship with its suppliers due to the fact that dairy and food products quality is very necessary in food related business. Nestle focuses on building strong and sturdy relationships with its supply partners and constantly guides them how to work more proficiently to develop quality and cost-effective products. However, suppliers are always free to switch to other brands and thus company faces strong force here.
4. Bargaining power of customers: This is again a strong force for company due to availability of alternative products. Nevertheless, constant innovation and development in dairy and food-related products have made very influential choices for the customers that have made Nestle one of the prominent brands to gain customers support.
5. Competitive rivalry: Since Nestle maintains quality in its products, it has always been dominant in the marketplace and beyond its competitors and therefore, this force remains weak force for the company( Varma & Ravi, 2017).

1. Threats of new entrants: GSK Porter’s five forces analysis reveals its competitive position in Australian market. Threats of new entrants in bio-chemical company is relatively a weak force since lots of cost investments is required by the companies for making initial experiments and researches. As a result, GSK have to worry less under this force, however, GSK requires developing its existing products to capitalise more on its brand name.
2. Threat of substitute products: At present, there are many alternative products available in bio-chemical industry which makes threat of substitute products a strong force for the company.
3. Bargaining power of buyers: This is a weak force for the company since the company have achieved strong market position. Since most of its customers includes doctors, patients, chemical engineers and other healthcare institutes, they avoid compromising in product quality and try to avail products from reputed brands only like GSK.
4. Bargaining power of suppliers: This force also remains weak for GSK as the company always adhere to legal and governmental rules along with paying excellent remuneration and cost for raw materials to its suppliers for which suppliers show less to no bargaining power.
5. Competitive rivalry: GSK prospers without actually facing much competition with its rival companies since the company shows excellent foresightedness and plans ahead of the others. However, in bio-chemical industry, many rivalry companies give competition to GSK for which the company keeps developing its products with extensive research(GlaxoSmithKline Australia Pty Ltd., 2018).

Conclusion

The above essay has explained what strategy development tools are and after applying these tools in real life industries, it can be said that strategy development tools plays a significant role in smooth running of businesses. The above essay has applied SWOT analysis and Porter’s Five forces analysis in bio-chemistry and a dairy food company and found out how these tools can be utilised to analyse both external and internal environment of the companies including industry rivalries.

References

Anna, A., 2015. Strategic Management Tools and Techniques and Organizational Performance: Findings from the Czech Republic. Journal of Competitiveness, 07(03), pp. 19-36.

GlaxoSmithKline Australia Pty Ltd., 2018. GlaxoSmithKline Australia: About Us. [Online]
Available at: https://au.gsk.com/en-au/about-us/
[Accessed 08 12 2018].

GSK Australia, 2017. Responsible Business Highlights Report 2016. [Online]
Available at: https://au.gsk.com/media/388915/gska_responsible_business_report_2016.pdf
[Accessed 08 12 2018].

Gurel, E. & Tat, M., 2017. SWOT Analysis: A Theoretical Review. The Journal of International Social Research, 10(51), pp. 994-1006.

Indiatsy, C.  M., Mwangi, M. S., Mandre, E. N., Bichanga, J. M. & 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, 06(16), pp. 75-85.

Nestlé, 2018. Nestlé in Oceania. [Online]
Available at: https://www.nestle.com.au/aboutus/home/nestle-australia-company
[Accessed 08 12 2018].

 Omsa, S., Abdullah, I. H. & Jamali, . H., 2017. Five Competitive Forces Model and the Implementation of Porter’s Generic Strategies to Gain Firm Performances. Science Journal of Business and Management, 5(01), pp. 9-16.

Osita, I. C., R. , I. O. & Justina, N., 2014. Organization’s stability and productivity: the role of SWOT analysis an acronym for strength, weakness, opportunities and threat. International Journal of Innovative and Applied Research, 02(09), pp. 23-32.

Varma, G. . R. & Ravi, J., 2017. Strategic Analysis on FMCG Goods: A Case Study on Nestle. International Journal of Research in Management Studies, 02(04), pp. 12-22.