The business world has become very competitive and requires every company to have strong competitive strategies in order to enhance growth and sustainability in the market. Most firms strive for a competitive edge, but few use the right tools towards achieving it (Azizul Islam and Jain, 2013, p. 110). Wesfarmers is an Australian based retail company that operates in a highly competitive retail sector. The management of the company views competitive edge as an activity that creates value for the company against its rivals. Wesfarmers face stiff competition from Woolworths, Wal-Mart, TESCO, ALDI, and Macro Wholefoods Limited companies. Wesfarmers has been striving to bridge the gap between perceived value and cost of its retail products to be higher than that of these competitors. To achieve this competitiveness, Wesfarmers is guided by company mission who is becoming a highly competitive retail company by providing customers with high-quality retail commodities (Ghemawat, 2016, p. 740). In an endeavor to achieve this goal, Wesfarmers applies competitive strategy development tools among which include the SWOT analysis, PESTEL, and Porter’s five forces. The essay will explain these strategy development tools and their applicability to Wesfarmers in obtaining a competitive advantage against rivals.
PESTEL (Political, economic, social, technological, environmental, and legal) business environment factors form a crucial tool in assessing competitive advantage by Wesfarmers in its external sector.
There are adverse political factors that affect the retail industry in which Wesfarmers operate. For instance, the federal government launched a competition policy that denies Wesfarmers the right to eliminate competition using its own strategies (Mortimer, 2016, p. 3). Such political barriers hinder Wesfarmers from formulating competitive policies that can help in gaining a competitive advantage against small entrants.