Analysis Of Australian Company’s Strategy: Offshoring, Expansion, And Job Losses

This Assessment will address the following Learning Outcomes:

• LO1: Describe the determinants of competitive advantage.
• LO2: Recognise the difference between the fundamental view and the dynamic view of competitive advantage.
• LO3: Develop a business strategy based on a comprehensive situational analysis.

Assessment Description

You are a strategic analyst for a large consulting firm and specialise in the analysis of Australian companies. You have been asked by your manager to write a report analysing an Australian company’s underlying strategy that has resulted in it moving some of its activities offshore with the loss of a number of local jobs as well as expanding into other international markets.

This is part one of your e-portfolio which will also be part of Assessment 3. In your analysis you are required to:

• Evaluate the external issues that are affecting the company and have driven it to employ a strategy that has resulted in moving jobs offshore.
• Analyse the internal issues that are making the company consider moving jobs offshore as part of its strategy.
• Identify the stakeholders in this company and discuss how the shift of offshore activities will affect these stakeholders.
• explain what is the competitive advantage for the company in moving in either expanding offshore and/or moving some jobs offshore
• list and assess the issues of this strategy, including risks, cost savings and/or revenue increase. Evaluate any other issues that you see are relevant to its success or otherwise. What are the strategic implications?

Evaluate External Issues

To ensure the proper implementation of the business strategic management it is important to implicate the idea of strategic and diverse thinking. The idea of strategic thinking initiates the idea of generation and application of unique and uncommon business insights that allows in the development of a competitive advantage for the organisation. This report contains some of the common and prominent analytical tools that allow in the better identification of the strategies used by the organisation PWC (Price Waterhouse Coopers). The report also intends to cover some of the prominent issues to identify if the company would be successful in gaining competitive advantage for their business expansion. The primary idea behind this assessment is to consider if offshore activities would enhance the business capability of an organisation or ensure that they are better performers in their home nation. The business expansion does not have to be necessary on an international level but might be considered on a domestic level as well. However, this assessment would only cover the aspect of international business expansion.

For the identification of the external issues influencing the operations of the company, it is essential to take in account the macro-environmental factors that eventually motivated the company to employ a strategy to move offshore.

Table 1: External Issues affecting the company

(Source: Created by the learner)

The international issues of an organisation act as a flagbearer of their capabilities that allow them to function conveniently in a particular market. The identification of the strengths, weaknesses, opportunities and threats would allow in gaining an insight for the company’s performance.

Table 2: SWOT Analysis of PWC

(Source: Created by the learner)

The company considers it of vital importance to engage their stakeholders in their integral business operations. The key stakeholders of PWC comprise of the following:

• Partners, their people, potential recruits and alumni
• Customers
• Government body
• Suppliers
• Local communities and NGOs
• Media

The shift of offshore activities might have a negative implication on some of the stakeholders but there is a possibility that there would be substantial amount of benefits on ensuring that the organisation also incurs some amount of benefits. For instance, the potential recruits or the partners would be considered of great assistance if they are able to formulate an effective talent strategy and build professional personal networks (Esmail, Moore and Rein, 2015). Meanwhile, the customers would be completely aware of the challenges that are about to come and recognise the role of corporate sustainability as well. However, the organisation might have difficulty in complying with the regulations that are different from their operational headquarters regulations. Also, the suppliers might not be collaborative enough to make sure that they are economically benefited. The local communities and NGOs would mainly be concerned with the social responsibility of the organisation and transparency that can be gained with public engagement (Forsythe et al., 2016). Lastly, the media plays a role of conveying the strategies and ideas of the company to the customers implying that there might be a possibility of them gaining substantial amount of benefits from them.

Analyse Internal Issues

The use of Porter’s five forces would be considered applicable for the identification of the competitive advantage that the company has. Given below is the Porter’s five analysis of the company for expanding their operations offshore:

Bargaining Power of the Suppliers

The company has established a cohesive relationship with their suppliers and but their bargaining power cannot be considered high (Fleisher and Bensoussan, 2015). The bargaining power of the suppliers is always low allowing the company to gain a dominance over the supply chain management and allowing the suppliers to be associated with a reputed company.

Bargaining Power of the Buyers

Here, the bargaining power of the buyers can be considered high because the company has to permit their functioning according to the choice of the clients. Customer satisfaction is of primal importance to the company.

Threat of New Entrants

The company is the leading player in its respective industry, thus, it can be said that the threat of new entrants is low because it would be a barrier for them to compete with such a reputed company (Rothaermel, 2015). Further, it would require them to have loyal clients and huge amount of customer base.

Threat of Substitute Products

There is an intensive amount of competition in the industry that the company operates, implying that the consumers are provided with the ability to ensure that they can go for the services of the substitute companies if not satisfied with the services of PWC.

Competitive Rivalry

As mentioned earlier, the competitive rivalry in this industry is extremely high implying that the company would be subjected to being replaced by the customers. Some of the prominent competitors of the company are Deloitte, EY, KPMG and many others (Téguia, Chambost and Stuart, 2018).

The external and internal analysis led to the identification of various factors that would impact the functioning of a prominent organisation like PWC. It has also been identified that the organisation would be accustomed to certain amount of risks because of the external environment of an offshore country. Also, it can be said that the company would be accustomed to the almost similar threats that would possibility result in the decline in their cost revenues or labour costs (Farrell and Gallagher, 2015). The primary risks involved comprise of extreme amount of political obligation, recession or inflation rate in the emerging countries. That has the best possible tendency to ensure that the company would be instigated to take a drastic step, eventually leading to cause a huge loss in their business operations (Lwin et al., 2018). A formation of a proper risk management strategy is essential for PWC to make sure that their offshore operations do not suffer much as their existing operations in their home country. It might also be difficult for the company to cope with the numerous legal and the socio-cultural differences that would hamper their functioning.

Identify Stakeholders and Discuss the Impact of Offshoring

Conclusion 

The report intended to focus on some of the integral aspects associated with the strategic management ideas persuaded by the organisation named PWC. The assessment also led to the use of various analytical tools that permitted in the identification of the internal capabilities of an organisation and the extent of competition that lies in the offshore market. The assessment led to the identification of the external factors that might impact the functioning of an organisation and at the same time focused on the intensity of the choices initiated by the stakeholders of the company. Thus, it can be said that the stakeholders play an essential role in the decision making process of an organisation. The assessment also led to the identification of the strategic implications of the existing methods considered applicable by an organisation.

Reference List 

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