Analysis Tools for Strategy Development in Business - Desklib

This article discusses the usage of SWOT, PESTEL, and 5F analysis tools for strategy development in business with practical examples. It explains how to evaluate internal and external factors to maximize opportunities and limit threats to an organization. The article also provides a list of references for further reading.

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Strategy Development Tools
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Introduction
Organization’s growth rate depends on various factors such as availability of market, availability
of stiff competitors, availability of raw materials, proper management, and many other factors
(Chungyalpa & Bura 2015, p.76). However, a good strategic development plan is a roadmap that
drives all the factors of production to maximum utilization. The development strategy is
achieved after the analysis of the elements: a process called strategy analysis. Strategy is defined
as the described way and how a particular objective is to be achieved, thus strategic analysis
refers to the process of researching a specific environment of business to formulate a strategy
(Al-Tabbaa, Leach & March 2014, p.660). The strategy analysis is performed through various
tools such as PESTEL, 5F, RBV, PROFIT, I/O, SWOT, and CIA and every organization
employs tools that are relevant to the situation. The paper explores specifically the usage of
SWOT, PESTEL, and 5F giving practical examples with the Rhodes Island Automobile
Distribution Freight Infrastructure.
SWOT Analysis Tool
Every business success lies in sound decisions made by the management, and the choices are
always guided by the outcome of SWOT analysis (Ahmadi, Dileepan, & Wheatley 2016, p.3).
SWOT stands for strength, weakness, opportunities, and threats, thus refers to the process of
evaluating the strengths, weakness and new ideas that the company should explore as it combats
possible threats. William D. Book, Edmund P. Learned, Kenneth Andrews, and C.Ronald
Christensen developed the SWOT analysis tool in 1960s. The analysis helps in mapping the
future of the business, during exploring of new initiatives, revamping of internal policies or even
during altering of policies in the middle of executions.

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The first two components of SWOT analysis refers to the internal factors such as the financial,
physical ,human ,natural and current resources. Strengths are the current factors that have made
the organization to outstand the competitors in the market, for example, strong brand name while
Weakness refers to the factors that hinder the development of the company such as inadequate
capital (Al-Araki 2016, p.618). The last two components refer to the external factors that affect
every facet of a company such as marketing trends, demographic suppliers, political environment
and many others. The opportunities refer to the available opportunities for expansion, for
example, the increasing demand of the specific product, while the threats refer to the risk factors
that hinder the development of the organizations for example entry of a competitor.
The first step of using SWOT analysis is the collection and evaluation of the fundamental data
such as population, demographics, technology, and many others. The collected data is grouped
accordingly under the four elements: the strengths, weakness, opportunity, and threats. After
that, a matrix for the business alternatives are put under considerations, and then the proper
decision is made. For example, the SWOT analysis of a Rhodes Island automobile freight
infrastructure that supports the national and international distribution of automobiles will be as
follows:
Example of SWOT Analysis of Rhodes Island
Internal factors Strengths weaknesses
Being located at the Davisville port, thereby
no maintenance tax is paid amounting to
averagely $ 35 per imported automobile
unlike other distributors such as Autoparks
The Davisville port is much
far away from the traditional
care centers in the US that are
responsible for manufacturing

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Wheel & Tyre Ltd. Moravian Motors and
many others that are located on the taxable
lands (Nakwa & Zawadie 2012, p.271).
The availability of the national market
allows the industry to distribute cars all
over the united states commanding about
3.5% of the U.S gross domestic product
hence outdoing others(Ho & Mauro 2016,
p.526-532).
The portside land of the Davisville is
uncongested hence providing a larger space
for the importation and exportation of cars.
Availability of other ports within such as
Baltimore offers new entry and exits of cars
within and outside the country.
new cars, hence making it
difficult to export new cars
like the Baltimore.
External factors Opportunity Threats
The expected shortage of truck driver may
result in longer distance cargoes that might
entail the rail transportation of automobiles;
thereby Davisville rate of usage will
Biggest used -car importers
such as Nigeria tend to reduce
the amount of importation as
some companies establish car
assembly plants in Africa

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increase.
The increasing car production in Mexico
probably might increase the importation of
cars through the sea and Davisville port.
The production facilities in Mexico tend to
serve the US distribution operations directly
through rail, which pose threats to the
operations of Davisville.
making it easy and economical
to import from African
countries.
PESTEL Analysis Tool
PESTEL analysis is a strategic tool used to analyze business planning and understand the
external forces that drive up a business (Balasopoulou et al. 2016, p.1). These forces include
trade barriers, demographic changes, tax changes, and many others. The word PESTEL
represents Political, Economic, Social, Technological, Legal, and Environmental. A strategic
business developer needs to understand these external environmental factors to maximize
opportunities and limit the threats to an organization.
Example of Pestle analysis of Rhodes Island automobile distributor
Political factors The political stability of the United Kingdom offered favorable for the
launch of and development of the Rhodes Island automobile distribution.
According to the World Bank report, in the United Kingdom, it only takes 13

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days to establish a business. The united kingdom government also offered
subsidies to the RI automobile for the growth.
Economic factors According to the report by the world bank UK ranks as the first in Europe
and sixth in the world as the best place to start a business, and these are
influenced by the economic stability of the country that offers a ready market
for products(Rugraff & Sass 2016, p.1408)
Social factors United Kingdom have large population favored by the international inflow
that created a large market and different car tastes, favoring the development
of the company.
Technological
factors
The international technological advancement such as the user of the internet
have enabled the importation and exportation of cars through the Davisville
port very easy as many of orders are placed through emails (Determann &
Perens 2017, 472). The importation process has been favored with the
development of Airbus and large ships that are capable of carrying cars.
Legal factors The legal factors established by the United Kingdom and other neighboring
countries allowed importation and exportation of goods facilitated the car
business.
The competition law established in the United Kingdom allowed the entry of
other competitors such as Moravian Motors. The fair competition pushed the
Rhodes Island to improve on the fashion, quality, and quantity of cars being

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imported and exported in respect to the customers’ needs. These improved
qualities enabled the business to retain and attract more customers.
The business location at the port Davisville provide a large space for loading
and offloading of the cars from the ships. The large space ensures that no
injury occurs during the process.
Environmental
factors
The environmental concerns for pure atmosphere, low fuel consumption and
less noise producing cars shapes the nature of the business. Rhodes Island
automobile therefore, changed the nature of the cars being imported to
conform to the environmental requirements placed by the government.
5 Forces Analysis Tool
The 5 F refers to the Five Forces Model, developed by Michael Porter to analyze the industry
and the risks (Yetkin 2013, p.463). The model comprises of five elements that are bargaining
power of buyers, suppliers, entry of potential entrants, competition from established entrants, and
substitutes. The bargaining power of buyers of the United Kingdom increased as a result of the
increased number of automobile distributors such as the Autopark Wheel & Tyres. The high
bargaining power shaped the behavior of the business to captures the possible number of
customers. Substitutes are the alternative products offered by other companies to replace the
existing product. The threat of substitute to the automobile distribution business is moderate as
customers differ in taste-making RI to withstand. Rivalry among the existing firms such as
Baltimore port that also distribute automobiles affects the operations of the Rhodes Island as
parts of the market are accessed by the competitors. The availability of the potential entrants into

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the business of automobile distribution tends to reduce the market share of the Rhodes Island.
Finally, buyers purchasing power affects the quantity of demand.
Conclusion
There are numerous strategy development tools, and the application of each depends on the
organization and the objective of the analysis. However, the use of more than one tool such as
SWOT and PEST provides better information’s, as the latter focus more on the environmental
factors than the former.
List of References
Ahmadi, M, Dileepan, P, & Wheatley, K 2016, 'A SWOT analysis of big data', Journal Of
Education For Business, 91, 5, pp. 1-6, Academic Search Premier, EBSCOhost, viewed 14 April
2018.

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Al-Araki, M 2013, 'SWOT analysis revisited through PEAK-framework', Journal Of Intelligent
& Fuzzy Systems, 25, 3, pp. 615-625, Academic Search Premier, EBSCOhost, viewed 14 April
2018.
AL-Tabbaa, O, Leach, D, & March, J 2014, 'Collaboration Between Nonprofit and Business
Sectors: A Framework to Guide Strategy Development for Nonprofit Organizations', Voluntas:
International Journal Of Voluntary & Nonprofit Organizations, 25, 3, pp. 657-678, Academic
Search Premier, EBSCOhost, viewed 14 April 2018.
Balasopoulou, A, Latsou, D, Kousoulakou, H, Michael, N, Kenzie, D, Mair, A, Vontetsianos, T,
& Geitona, M 2016, 'The use of PESTEL as a change management tool to inform change
management of polypharmacy and adherence within SIMPATHY program',
InternationalJournal Of Integrated Care (IJIC), 16, 6, pp. 1-2, Academic Search Premier,
EBSCOhost, viewed 14 April 2018
Chungyalpa, W, & Bora, B 2015, 'Towards Conceptualizing Business Strategies', International
Journal Of Multidisciplinary Approach & Studies, 2, 1, pp. 73-83, Academic Search Premier,
EBSCOhost, viewed 14 April 2018.
Determann, L, & Perens, B 2017, 'OPEN CARS', Berkeley Technology Law Journal, 32, 2, pp.
915-988, Academic Search Premier, EBSCOhost, viewed 14 April 2018.
Ho, G, & Mauro, P 2016, 'Growth-Now and Forever?', IMF Economic Review, 64, 3, pp. 526-
547, Academic Search Premier, EBSCOhost, viewed 14 April 2018.

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Nakwa, K, & Zawdie, G 2012, 'The role of innovation intermediaries in promoting the triple
helix system in MNC-dominated industries in Thailand: the case of hard disk drive and
automotive sectors', International Journal Of Technology Management & Sustainable
Development, 11, 3, pp. 265-283, Academic Search Premier, EBSCOhost, viewed 14 April 2018.
Rugraff, E, & Sass, M 2016, 'How Did the Automotive Component Suppliers Cope with the
Economic Crisis in Hungary?', Europe-Asia Studies, 68, 8, pp. 1396-1420, Academic Search
Premier, EBSCOhost, viewed 14 April 2018.
Yetkin, U 2013, 'Revealing the Change in the Maritime Security Environment through Porter’s
Five Forces Analysis', Defence Studies, 13, 4, pp. 458-484, Academic Search Premier,
EBSCOhost, viewed 14 April 2018.