Analysis of Business Strategies for SWOT, PESTLE and Porter's Five Forces Framework
Verified
Added on 2023/06/12
|8
|1762
|253
AI Summary
This article discusses the SWOT, PESTLE and Porter's Five Forces Framework for analysing business strategies. It explains the strengths, weaknesses, opportunities and threats of an organization. It also analyses the external environment of an organization with PESTLE framework and competition with Porter's Five Forces Framework.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
Running head: ANALYSIS OF BUSINESS STRATEGIES ANALYSIS OF BUSINESS STRATEGIES Name of the Student Name of the University Author Note
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
1ANALYSIS OF BUSINESS STRATEGIES Analysis of SWOT Framework SWOTframeworkisusedforanalysingtheinternalenvironmentofvarious organizations in a detailed manner. The different aspects of the business that are a part of the SWOT analysis process are strengths, the weaknesses, the opportunities and the threats. The framework helps the strategists and the managers of different organizations to formulate effective strategies. Strengths– The various strengths that are related to the organization are, the marketing mix elements, the USP of the products and services and the share the company holds in the market. The demands that are related to the various services and products of the organization and the management style that is followed in the companies are the major strengths. The strengths enable the company to create a competitive position in the market (Yu, 2017). Weaknesses–Theweaknessesarealsoamajorpartoftheoperationsof organizations in the market. The weak usage of the financial resources of an organization form major weakness. The analysis of the reasons behind the company losing out to competition in the market form a part in the weaknesses. The lack of loyal stakeholders in the organization are also a weakness of these companies. Opportunities –This aspect is related to the analysis of the possibilities of expansion and innovation of the operations of various organizations. The new market areas where the company plans for its operations and the expansion of its product and service offerings are also major opportunities (Shabanova et al., 2015). Threats –The high levels of competition in the market and the low prices of similar services and products offered by the competitors are major threats to the operations of the
2ANALYSIS OF BUSINESS STRATEGIES organizations. The control that the organizations have over their revenues and credits are analysed as a part of the weakness related factors. The old and outdated technologies used by organizations are also a part of the weakness. Example– The SWOT framework is used for analysing the retail industry and the different aspects can be easily analysed with the help of this tool. The strengths of the retailers can be analysed by discussing the financial backup that he has and the prices that he offers to the customers. The unique product offerings of the retailers also form a part of the strengths. The identification of weaknesses are also important in case of the retail industry as it depicts the strength of the brand image of retailers. The opportunities of retailers are related to expansion and identification of consumer needs. The threats that are posed towards the profitability of the retailers helps them in formulation of strategies. Analysis of PESTLE Framework The PESTLE Framework is mainly used for the analysis of the external environment where the organization has its operations. The most important factors that are analysed with thehelpofthisframeworkare,political,economic,legal,technological,socialand environmental. The PESTLE analysis framework provides a holistic view of the external environmentof anorganization.ThevariousaspectsrelatedtoPESTLEanalysisare significant in understanding the industrial environment. Political –These factors deal with the ways by which the government interferes in the operations of the companies. The policies and the regulations that are formulated by the government have immense effects on the organizational processes and profitability. The other factors that are related to political aspects include the fiscal policies, the trade tariffs which are decided by the government (Frynas & Mellahi, 2015).
3ANALYSIS OF BUSINESS STRATEGIES Economic–Thesefactorsarethedeterminantseconomicperformanceofthe countries where the organizationsoperate. The organization is highly affected by the economyofthecountrywhereithasithasitsoperations.Theprofitabilityofthe organizations and the revenues are affected by the economic conditions of the country. The riseintheratesofinflationandthechangesindemandsaffecttheprofitabilityof organizations. Social –The social condition of the country is scrutinized by analysing the social factors of PESTLE framework. The cultural trends, the analysis of the population and the demographics are analysed with the help of this framework (Kolb, 2016). Technological –The changes that have occurred in the technologies that are used by the various organizations are analysed in this part of the framework. The automation of various activities and the usage of new technologies are a part of the technological factors. Legal –The different laws that affect the operations of the organization are discussed in the legal factors of PESTLE. Environmental –The effects of the operations of the organization on the external environment are analysed in this aspect of PESTLE framework (Hassan, Sistani & Raju, 2014). Example– The political factors of the retail industry include the policies that are formulated by the governments. The government policies affect the prices of the retailers and the costs related to supply chain and production. The economic condition has immense effects on the trade of the retail organizations as it affects the demands of the consumers. The social conditions affect the choice of retail consumers related to products that they offer. The technological advancements affect the operations and production processes of retail industry.
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
4ANALYSIS OF BUSINESS STRATEGIES The laws and the regulations are important for operations of retail sector. The employment laws and labour laws also affect the retail operations. The ways by which retail operations affecttheenvironmentandthefactorsrelatedwastereductionarealsosignificant (Rothaermel, 2016). Analysis of Porter’s Five Forces Framework The Porter’s Five Forces framework can be used by organizations to analyse the competition of the organization that is present in the industry in which it operates. The five forces of the Porter’s Five Forces framework are as follows, Competitive rivalry– This factor mainly deals with the strength that is shown by the competitors of the company in the industry. The intensity of the rivalry in the industry has an effect on the prices of the services and the products. Supplier power– The power that the suppliers have with respect to the organization and the number of suppliers that are owned are analysed in this aspect. The power of suppliers decreases of the company has huge supplier base and increases when the company has low supplier base (E. Dobbs, 2014). Buyer power– The buying power is based on the total number of buyers that are present in the industry. The larger number of the buyers leads to lower price capability of the organizations. Threat related to substitution– This is the force which deals with options that are available for the organizations in the industry. The huge number of options that are present in the market can further have negative effects on the profitability (Porter & Heppelmann, 2014).
5ANALYSIS OF BUSINESS STRATEGIES Threat related to new entrants in the market– This threat is related to the entry of new organizations in the market. The high chances of organizations to enter the market affects the existing companies in a negative manner. On the other hand, low chances of entry of new organizations in the industry have low effects on the profitability of the existing companies (Sheehan & Bruni-Bossio, 2015). Example –The retail industry faces huge threats from new organizations that enter the market. The huge options that are available for the retail products provide threats related to substitutes to the organizations. The number of buyers that are present in retail industry are quite high and the individual purchase is small. The power of the suppliers in the retail industry is low as many suppliers are present for each company. The rivalry levels on the other hand are high in the retail industry (Grant, 2016).
6ANALYSIS OF BUSINESS STRATEGIES References E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates.Competitiveness Review,24(1), 32-45. Frynas, J. G., & Mellahi, K. (2015).Global strategic management. Oxford University Press, USA. Grant, R. M. (2016).Contemporary strategy analysis: Text and cases edition. John Wiley & Sons. Hassan, S. M., Sistani, A. J., & Raju, R. S. (2014). Top Online Shopping E-companies and their Strength and Weakness (SWOT).Research Journal of Recent Sciences ISSN,2277, 2502. Kolb, B. (2016).Marketing strategy for creative and cultural industries. Routledge. Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming competition.Harvard Business Review,92(11), 64-88. Rothaermel,F.T.(2016).Competitiveadvantageintechnologyintensiveindustries. InTechnological innovation: Generating economic results(pp. 233- 256). Emerald Group Publishing Limited. Shabanova, L. B., Ismagilova, G. N., Salimov, L. N., & Akhmadeev, M. G. (2015). PEST- AnalysisandSWOT-Analysisasthemostimportanttoolsto strengthenthecompetitiveadvantagesofcommercial enterprises.Mediterranean Journal of Social Sciences,6(3), 705.
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
7ANALYSIS OF BUSINESS STRATEGIES Sheehan, N. T., & Bruni-Bossio, V. (2015). Strategic value curve analysis: Diagnosing and improvingcustomervaluepropositions.BusinessHorizons,58(3), 317-324. Yu, T. Y. (2017). The Evolutionary Profile of the Composite Retail Industry: Perspectives of Industry Life Cycle and Business Ecosystem.