In this assignment, we are going to discuss the strategy models used by the current business houses in practical life. These strategy models help us to determine the performance of the company. It helps the company to provide an insight into the weakness and opportunities that the company occurs during the business life span. In this assignment, we are going to relate these models to the practical world. The strategy models help in identifying how the business can grow with the right amount of profitability. With the help of these models, a business can also think about the future capabilities of the organization. The model provides the perspective for optimizing both the short term and long term objectives. For the analysis of the models, the company taken is the BHP Group Limited which is based in Australia but serves worldwide. It deals in Metal and Mining industry.
Strategy development models
The strategy models describe how one company operate and what the opportunities that come in the future. The company has a sufficient amount of resources to grab those opportunities. The different business uses different models and it depends on the output of the business and its standing in the market. The various types of models are
- Resource base view model defines the use of a resource that the firm uses to achieve sustainable competitive advantage. The resources used by the business can be tangible and intangible.
- The input-output model helps to determine the amount of productivity with the small number of resources in the given time frame. The less amount of inputs are used to gain high productivity is the best method.
- Ansoff matrix model helps the management team of the organization by developing strategies for future growth. It also shows the risk of the strategies developed.
- Generic strategies model shows that to gain a competitive advantage the three options can be used and that are cost leadership, differentiation and focus. Every option focuses on the different needs of the organization (Phadermrod, et. Al., 2019).
Model 1 SWOT Analysis
It is the model used to analyze the strength, weakness, opportunities, and threats relating to the business organization. It helps in decision making and the planning process of any strategy. It identifies both the internal and external factors. It is used by the profit-making company as well as nonprofit organizations. This model helps in marketing and also shows the weakness of the competitor that becomes the strength of the other company. If there is any problem in any new decisions that it should be made or not than the SWOT analysis of that decision should be made and then the decision should be made.
SWOT analysis model can be used to revise the models used, planning process, helps in decision making, to identify the barriers, and reveal the opportunities and limitations. It helps in organizing the information and identify the barriers in the organization that prevent the company from growing. It helps in filling the gaps relating to cultural differences.
SWOT analysis is used by BHP managers to do the situational analysis of the company. This analysis is done with the help of effective and efficient coordination of all the team working in the company for the betterment and future opportunities (Gürel & Tat, 2017). There are various points find by the company during the analysis of the company with the help of this model. All the following points are depicted here in the diagram below
It is the strategic analysis of the model on the basis of the macro-environment factors and the external environment factors also. It is the tool that understands the business and the decisions made by them. It understands the market growth of the business and its financial position in the competitor’s industry. The PESTLE analysis factors include political, economic, social, technological, environmental and all the legal factors. The factors vary according to the nature of the company. Some of the company which is small in nature only affected by some of the factors but the large business houses are affected by all the factors. It identifies the business needs and solution to the identified problems.
BHP also uses this tool for the analysis of the macro-environmental and other factors. Changing in the factors also affect the business in the positive and negative factors. If the government changes any tax policy then the company has also get effected because either the company has to extra tax amount or any other reason. It also impacts the players that are involved with the BHP Company. The factors can impact the competitive advantage and the profitability of the company. The analysis provides detail about the challenges that the organization has to face due to a change in the factors (Dulčić, et. Al., 2012). The various factors affecting the BHP Company are as follows
Porter’s five forces
It is the strategy model used by the companies to analyze the competition in the business. If any company affected by all these five forces negatively then the company is going to reduce its profitability in the market. The porter’s forces are the bargaining power of suppliers and buyers and the threat of new substitute and threat of new entrants. The analysis is done on these factors only which help the firm to decide its standing in the market. It affects the company ability to serve its customers and making the profit. It is done for the purpose of making qualitative strategic decision making in the company.
BHP Company uses the forces to decide the standing position of the business in the market and the amount of profitability in the market. It helps in enhancing the competitiveness in the Metals and the Mining industry. It discusses how the company can build a sustainable competitive advantage in the industry. The analysis of the five forces in the BHP Company are as follows
- The threat of new entrants
New entrants in the industry put pressure on the BHP Company and the company has to lower the price to remain in the market for a long time. It has to provide the new value of products to the customers for building the new strategy (Burns, et. Al., 2016).
- Bargaining power of suppliers
There are a large number of suppliers in the Metals industry so the bargaining powers of the suppliers are moderate and because of this they have to decrease their margin otherwise they will go to any other supplier.
- Bargaining power of buyers
The power of buyers is high and they demand more products at the lowest price. This builds pressure on the company to produce the product and sustainable in the long run in the market.
- Threats of new substitutes
In the Metals and Mining industry, the threats of new substitutes are high and this will impact the company products that it is offering to its customers (Cadle, et. Al., 2014).
From the above analysis it is concluded that the strategy used for the analysis of the company are the important to discover the various things about the company. It helps in deciding the competitive position of the business and the standing of the business in the market. These strategies can bring changes in the work of the company and develops the new idea of reducing the risk and increasing the market share in the company. The strategic tools helps in deciding the significant firm profitability in the market area. The company can also use this strategy to decide the strength and weakness and help them to cope up with these amount of risk. If the risk is identified the minimization can be done with the use of various amount of strategies.
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan International Higher Education.
Cadle, J., Paul, D. and Turner, P., 2014. Business analysis techniques. Chartered Institute for IT.
Dulčić, Ž., Gnjidić, V. and Alfirević, N., 2012. From five competitive forces to five collaborative forces: revised view on industry structure-firm interrelationship. Procedia-Social and Behavioral Sciences, 58, pp.1077-1084.
Gürel, E. and Tat, M., 2017. SWOT analysis: A theoretical review. Journal of International Social Research, 10(51).
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based SWOT analysis. International Journal of Information Management, 44, pp.194-203.
Tanwar, R., 2013. Porter’s generic competitive strategies. Journal of business and management, 15(1), pp.11-17.
Yüksel, I., 2012. Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), p.52.