Competitive Strategy: PESTEL Analysis, Five Forces Framework, SWOT Analysis, Resource-based View

Competitive Strategy
2019

1
PESTEL Analysis
The objective of forming strategic policies in a company is to make sure that it is prepared
for external challenges that are likely to create obstacles for the organisation in relation to
achieving its goals; therefore, corporations use PESTEL analysis to collect relevant data
regarding macro environmental factors (Pan, Chen and Zhan, 2018). In this model,
companies evaluate factors such as political (P), economic (E), social (S), technological
(T), environmental (E) and legal (L) because they create opportunities for the company
and also poses many threats that are likely to hinder the profitability of the organisation.
This tool enables them to get a bird-eye view of these factors to stay relevant in market
conditions. A good example is Apple Incorporation which is a leading American brand that
operations in computer hardware, software, digital distribution and consumer electronics
industry. Recent political changes brought by the Trump Administration such as trade ban
and enforcing the company to manufacture its products in local facilities affected the
business of the company (Business Today, 2018). The economic growth of emerging
markets such as India provides an opportunity for Apple to expand its operations in
international markets and increase its profitability.
Customers’ perception of Apple products is positive, and they associate this brand with
luxury based on which the company has a positive social image. Apple heavily relies on
technological advancements to offer better products to customers, for example, it
introduced an ECG (electrocardiogram) in its Watch series 4 through which customers can
directly take ECG from anywhere and share it with their doctors (Cipriani, 2018). The
company also focuses on protecting environmental resources and reducing its carbon
footprint; for example, it announced that its operations worldwide are powered by 100 per
cent renewable energy (Statt, 2018). Legal provisions of the international market, as well
as domestic provisions, are necessary to be followed by Apple to make sure that it did not
face legal penalties.

2
Five forces framework
Michael Porter developed the five forces framework that assists companies in evaluating
external factors in the industry that affects their profitability. The attractiveness of an
industry is determined by these factors which are necessary to be considered by
companies while managing their operations or entering into new markets (Wilson, 2015).
The five forces which are necessary to be considered by companies include the bargaining
power of suppliers, the threat of substitute products, the ease of entry in the market, the
intensity of competition between brands and the bargaining power of buyers. Without an
evaluation of these factors, companies cannot generate a competitive advantage in the
market. This model can be understood by an example of Starbucks which is an American
coffee company that operates in more than 30,000 locations worldwide (Business Wire,
2019). The bargaining power of buyers in the coffee shop industry is high because
customers have many options and they can easily switch between brands.
The threat of substitute products is also high because many competitors offer alternative
products in the market that are easily accessible for customers. The bargaining power of
suppliers is medium for Starbucks. The company make sure that 100 per cent of its coffee
is ethically sources which mean that the number of its suppliers is comparatively low and it
has to rely on them in order to continue its operations; however, it has created a positive
relationship with them (Starbucks, 2019). The intensity of the competition between brands
is high because of companies such as Costa, Dunkin Donuts, McDonalds McCafe and
others. The threat of new entrants is low because the number of powerful brands in the
industry is high and new businesses have to deal with suppliers, distribution networks and
legal compliances to offer their products worldwide which increase their operating costs
and investment in the beginning.