Section 1 Summary of Strategy

Strategy is one of the three core elements of a firms internal context. Strategy deals with
goals and objectives, the firms environment, its resources and structure, the scope and
nature of activities and ultimately the behaviour of its members (Needle 2010, p.256). Piggot
(2012) expands this view, presenting that a firms strategy can be thought of as its game plan-
establishing goals, and methods of achieving these goals. Significantly, she proposes that
strategy enables a business to achieve a Sustainable Comparative Advantage (SCA) through
long-term profitability.
When considering strategy, it is first important to ascertain the firms starting position
through internal and external analysis. An analysis of a firms Core Competencies is the
primary form of internal analysis. Core Competencies are defined as those activities of an
organisation that give it an advantage over its competitors (Needle 2010, p.274). Conversely,
the main external analysis tool she presents is Porters Five-Forces Model, which identifies
the threat of potential entrants, the threat of substitution, the bargaining power of buyers, the
bargaining power of suppliers, and competitive rivalry as the five main external influences on
a firm. Wetherly and Otter (2011) suggest that the primary technique of synthesising this
internal and external analysis is the SWOT method. This encourages a business to evaluate
Strengths, Weaknesses, Opportunities and Threats to determine which influences must be
capitalised upon and which should be minimised. Another synthesised analysis tool is
stakeholder examination. Ackerman and Eden (2011) illustrate that firms can categorise
stakeholders as Players, Subjects, Context Setters, or the Crowd according to the Power-
Interest-Grid, allowing them to tailor their strategy for particular stakeholders.
The second major strategic consideration is that of formulation. Strategy must be formulated
with the intention of moving the business towards their vision. Piggot (2012) suggests that
Porter Generic Strategies are a firms primary formulaic options. They focus on Product
Differentiation and Cost Leadership as the two main opposing approaches to strategy. By
choosing one of these, firms gain a basic framework for their strategy formulation.
The final consideration is that of strategy implementation. This step involves communicating,
actioning, monitoring and evaluating the business plan, as well as preparing for strategic
failure. In his Five Ps Model of Strategy Implementation, Pryor (2007) suggests that
Purpose, Principles, Processes, People and Performance are the five essential elements of


successful implementation. Notably, in recent years, strategic implementation has been
identified as a potential core competency which could help create a SCA.
Thus, it evident, that by considering the analysis, formulation and implementation of strategy,
we can gain a deeper insight into the internal context of business.
Section 2- Application of Key Strategy Concepts and Ideas
An understanding of a firms internal context is further enhanced by considering real world
examples of business strategy in practice. The first article which demonstrates this is New
Yahoo CEO Scott Thompson cuts 2000 jobs, published by The Australian. The article
discusses the CEOs latest changes to Yahoos strategic plan, particularly addressing its new
analysis techniques. The main internal analysis undertaken by Yahoo is a renewed focus on
their major core competencies (Needle 2010), their long- standing reputation and prize brand
name, which may assist in giving it an advantage over competitors. The article also illustrates
a business utilising the SWOT (Wetherly and Otter 2011) method of internal-external
analysis. In terms of internal factors, Yahoos main strength is identified as its popular news,
finance and entertainment services (Australian 2012), which is contrasted against its primary
weakness of low productivity levels compared to competitors such as Microsoft. In terms of
external factors, the article illustrates how Yahoo is attempting to develop mobile services as
they recognise the opportunity of the growing number of people surfing the web on
smartphones (Australian 2012). Simultaneously, they are aware of the looming threat of
product substitution from leading competitors like Google. By exploring Yahoos use of the
SWOT analysis, the article thus demonstrates how a business can capitalise on strengths and
opportunities as well as minimise weaknesses and threats as part of their overall strategy.
The second article which illustrates business strategy is Bunnings spends $1.5bn to ward off
Masters published by The Financial Review. The article explores Bunnings changes to
analysis as they aim to achieve a Sustainable Competitive Advantage ( Piggot 2012) over
their emerging rival: Masters Hardware. Like Yahoo, Bunnings is utilising a focus on its Core
Competencies (Needle 2010) as a means of internal analysis. Its CEO John Gillam identifies
their main Core Competencies as good service and a wide product range. By identifying these
Core Competencies, Bunnings is now able to capitalise upon them, thus maximising profits.
In terms of external analysis methods, Bunnings is utilising Porters Five Forces, (Piggot
2012) and identifies the threat of substitution as the primary external factor currently
affecting them. This is due to the emergence of Masters as a direct competitor: providing


consumers with a new supplier of hardware and threatening Bunnings market share. Another
strategic tool explored in the article is Bunnings stakeholder analysis. By identifying
customers as players on the Power-Interest-Grid (Ackerman and Eden 2011), Bunnings is
motivated to give them sustained management attention in the form of improved customer
service. Thus, the article demonstrates how analysis techniques heavily influence a firms
strategic approach.
The third article which explores strategy is Cola wars, continued: good for you, not for
shareholders published by The Economist. In discussing Pepsis changes in strategy, the
article provides a real-world example of the formulation and implementation aspects of the
strategic process. Significantly, it illustrates the two opposing approaches to formulation
within Porters Generic Strategies (Piggot 2012). The first of these is Cost Leadership.
Pepsis intention to reduce costs through 8700 job cuts illustrates their aim to formulate
strategy upon the foundation of low production costs and reduced product prices to gain
market share from Coca-Cola, their main competitor. Contrastingly, it also aims to base
strategy formulation around Differentiation, through its launch of Pepsi Next in an attempt
to make the Pepsi brand unique in the soft-drink market. The article also explores the
importance of strategy implementation. Reflecting upon the failure of Pepsi Edge in 2004,
the article demonstrates how even though the analysis and formulation aspects of strategy
may be perfected, a successful strategy ultimately relies on its implementation performance,
so a business must always have contingency plans for strategic failure.
So, by addressing strategic analysis, formulation and implementation in Yahoo, Bunnings and
Pepsi, these three articles effectively illustrate the practical application of strategy within the
internal business context.








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