PESTLE Analysis

Strategy analysis is a process to identify the company’s strength and weakness. It is necessary for the company to identify the barriers to operate in the future. It helps the company to analyse the resources to ensure the future competitiveness, profitability, and growth of the company (Rothaermel, 2015).

In this paper, strategic analysis tools have been undertaken to analyse the different companies. This paper assists customer, investors, stakeholders, and government to identify to make the investment in the company. In this paper, strategic analysis tools are explained with the example of the Agriculture industry and tourism industry.

PESTLE Analysis is a tool which is used to analyse and monitor the macro environmental factors which affect the organisation. PESTLE stands for political, economic, social, legal and environment factors. This model analyses these factor which have an impact on the organisation. It helps to reduce the impact and effects of potential threats of the organisation (Business to you, 2018).

                                                                                        

                                                                                            (Source: Business to you, 2018)

Porter’s Five Forces Framework is a tool to analyse the competition and current position of the company. It identifies and analyses the five competitive forces which shapes every organisation and help to determine the organisation’s weakness and strength.  It identifies an organisation’s structure to determine the corporate strategy. This model is applied to search the profitability and attractiveness of the company (Jurevicius, 2013)

                                                                                        

                                                                                                   (Source: Jurevicius, 2013)

Grain crop Limited is a public company which is listed on the Australian Securities Exchange in Australia; the company’s core business is receiving and storage of grain and related commodities. It has been analysed that the government of Australia provides the subsidy to the small farmers and the agriculture industry. The company can take the advantage of the subsidies which help to increase the productivity of the company. The company faces the issues of the electoral system which is planned by the parliamentarians who spent more on the cities instead of the agriculture sector. It has been seen that the company is constantly growing with the rising population of the country. The income of the country is also rising which has impacted the demands of the company’s product and services. The demand for the immediate food is increasing in Australia which decreases the demand of the company’s product. The new technology is highly adopted by the Australia which reduces the cost and improves the quality of the products (Yudha, Tjahjono, and Kolios, 2018). The company stores the grain for a long time with the help of new technology which reduces the loss of the company. It is observed that the company has a high risk of damage to the product due to the climate change, low soil fertility and many others (Islam, and Mamun, 2017).

Porter’s Five Forces Framework

Grain crop Limited has the high level of threat of new entrants just because of lower pricing strategy and reducing cost. Innovation is also a reason for increasing threat. It has been seen that the company has a high level of bargaining power of buyers just because of the smaller and more powerful customer base of Australian agriculture. The bargaining power of the supplier of the company is high due to the less number of suppliers in the country. Suppliers of the Australian Agriculture Company Limited have a dominant position which increases the bargaining power of suppliers. The company has a high threat of substitute. The way of offering services is uniquely different from the other companies. It is observed that the company has less threat of competitors because of decreasing profitability of the industry (Grain Crop, 2018).

AWB Limited is a grain marketing company in Australia.  It has been seen that the company can take the advantage of the subsidies which is provided by the government of Australia. It has been evaluated that the government of Australia is offering a great investment opportunity in certain areas except for agriculture due to this the company faces the challenges of the capital growth. The company got affected from the social factor due to increase in the demand for the cheaper food in the market. Production cost is reduced by adopting new technology. The government of Australia restricts the company for the registration. It has been seen that the company has a risk of damage to the product due to climate change (Emis Store, 2018).

It has been evaluated that the company has a high level of threat due to low-cost requirement. It can be said that the company has a high level of bargaining power of buyer due to increasing income level. It is observed that the company has a high level of bargaining power of supplier just because of the minimum number of the supplier of the agriculture product in the market. The company has a low level of threat of competitor due to increasing new entrants in the market. New companies enter the market by adopting the new technology and serve the product with the new way which increases the threat of substitute for the company (Jarzabkowski and Kaplan, 2015).

Intrepid travel is the adventure travel company in Australia. It has been analysed that the warfare, terrorism, and violence has a negative impact on the development of the company (Intrepid, 2018). Political instability creates negative publicity for the company. The company is paying a good amount to its employees as compared to the other companies. The fluctuation in currency rate between the countries directly affects the company. The social factor has a positive impact on the company just because of the innovative culture introduced by the company which attracts the clients. It is observed that there is a global concern related to the environment which certainly is a threat for the tourism company (Dobbs, 2014).

PESTLE Analysis (Grain Crop Limited)

Intrepid has a low level of threat of the new entrants due to increasing communication channel like internet and social sites and it requires the high cost. In the tourism industry, there is very less number of people who fill the service section to the industry that is why the bargaining power of supplier of the company is less. The bargaining power of the buyer is high due to the internet business websites which helps the buyers in negotiating the prices. It has been seen that the new technology is expanding the size of the potential market and is the reason for increasing threat of the substitution for the company (Intrepid, 2018).

Intro travel is the travel company of Australia. It has been evaluated that the travelling rules and regulation is defined by each state and region government. It is observed that the company is growing due to the higher disposable incomes and changing lifestyle of the clients. The company always respects the social values of the people background; it helps the company in growing fast. It has been seen that the company is adopting the new technology; it always has latest and up to the mark technology in the planes (Intro travel, 2018). As per the analysis, the company always follows the rules and regulation which directly or indirectly are linked with the travel industry.  By using the best fuel and reducing the wastage of oil in the travelling, company is taking care of the environment.

It has been evaluated that the intro travel has the less threat of the new entrants due to high investment requirements. The company has the high bargaining power of the supplier just because of the minimum number of suppliers who deliver the services to the industry.  The bargaining power of the buyer is higher due to increasing internet and social websites. Social websites help the buyers in finding reduced prices and it is increasing their bargaining power. It has been seen that the internet reduces the difference between the companies which increase the competition level of the company. It is observed that the companies always come with the variation in services and the amenities which attract the customers. Thus, the company has the high level of threat of substitute (Gondwe, et al., 2017).

Conclusion

From the above analysis, it has been concluded that Porter’s model of industrial analysis provides the opportunities to the companies to communicate and establish the good position in the market. With the help of PESTLE analyse, the company makes the decision by analysing the external environment. It is observed that the Agriculture industry has less scope in the Australia market but the tourism industry has large scope in the Australia market.

References

Business to you. (2018) Scanning the Environment: PESTEL Analysis. [online] Available from: https://www.business-to-you.com/scanning-the-environment-pestel-analysis/ [Accessed 20/08/18].

Dobbs, E. M. (2014) Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp. 32-45.

Emis Store. (2018) About us. [online] Available from: https://www.emis.com/php/company-profile/IN/Awb_India_Private_Limited_en_3924808.html [Accessed 20/08/18].

Gondwe, K. J., Chiotha, S. S., Mkandawire, T., Zhu, X., Painuly, J. and Taulo, J. L. (2017) Crop residues as a potential renewable energy source for Malawi’s cement industry. Journal of Energy in Southern Africa, 28(4), pp. 19-31.

Grain Crop. (2018) About us. [online] Available from: https://www.graincorp.com.au/graincorp-oils/foods/about-graincorp-foods [Accessed 20/08/18].

Intrepid. (2018) About us. [online] Available from: https://www.intrepidtravel.com/en/about [Accessed 20/08/18].

Intro travel. (2018) About us. [online] Available from: https://www.introtravel.com/about-us/ [Accessed 20/08/18].

Islam, F. R., and Mamun, K. A. (2017)  Possibilities and Challenges of Implementing Renewable Energy in the Light of PESTLE & SWOT Analyses for Island Countries. In Smart Energy Grid Design for Island Countries. New York: Springer, pp. 1-19.

Jarzabkowski, P., and Kaplan, S. (2015) Strategy tools?in?use: A framework for understanding “technologies of rationality” in practice. Strategic Management Journal, 36(4), pp. 537-558.

Jurevicius, O. (2013) Porter’s Five Forces. [online] Available from: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html [Accessed 20/08/18].

Rothaermel, F.T. (2015) Strategic management. US: McGraw-Hill Education.

Yudha, S.W., Tjahjono, B., and Kolios, A. (2018) A PESTLE policy mapping and stakeholder analysis of Indonesia’s fossil fuel energy industry. Energies, 11(5).