Strategic management helps an organization

Running head: MARKETING
Marketing
Name of the Student
Name of the University
Author Note

1MARKETING
Introduction
The global advertising industry, in this era of technology advancement leading to high
completion faces significant strategic dilemmas that are driven by the rise in consumer
expenditure in the developing economies, pressure from key advertisers for result based
compensation and technological convergence. It has become highly crucial for the mentioned
industry to manage their business through effective strategic management. Strategic management
helps an organization with the direction of the efficient areas of the department of the business
like production, fiancé, accounting as well as marketing. This in turn helps the management to
understand the aspects of both internal as well as external business environment. External
environment analysis helps the management to detect the opportunities and threats that can be
experienced by the business. In the following paragraph, a detailed analysis of the global
advertising industry with the help of the Porter’s Five Forces tool will be conducted.
Discussion
Definition of the forces
A good number of tools are used by the management to conduct strategic environmental
analysis. Some of the major tools that used for conducting internal and external include PESTLE
analysis, Porters Five forces analysis as well as SWOT analysis.
The PESTLE analysis is generally used by an organization to understand the external
environment of the business. The mentioned tool helps the management to understand the
political environment, economic environment, socio-cultural environment, technological
environment, legal environment as well as environmental factors that possess the potential to
directly or indirectly affect the profit of an organization.

2MARKETING
The Porter’s five forces refer to a business analysis model which helps an organization to
explaining why a good number of industries are able to sustain different profitability levels. The
Porter’s five forces are used for measuring the attractiveness, profitability as well as competition
intensity of the industry in which an organization is either operating or will be operating in
future. The Five forces of Porter’s include
Competition in the industry: this analysis helps a company to understand the degree of
competition between existing organizations in the industry.
potential of the new entrants into the industry: analysis of this force helps the companies to
understand the threat from new entrances, the barrier to new entrances which can directly affect
the organization’s profit
power of the suppliers: Analysis of this force helps the management to understand if the industry
is dominated by the suppliers or not. More is the availability of raw materials less will be the
power of the suppliers and vise versa
power of the consumers: This force analysis is conducted in order to understand the consumers
Threat of the substitute products: This force analysis is conducted in order to understand the
degree to which the business of an organize can get affected from substitute product or services.
Applying Porters five forces for analysing the Advertising industry
Threat for Potential Entrants: The barriers to new entrance is low when it comes to the
advertising industry in the year 2015. The chief entry barriers to the advertising industry includes
constrain in getting access to the key media space. Difficulties to gain deep connection with
demographics, behaviours as well as attitudes and the ability to attract, nurture as well as retain