Key Strategy Development Tools

Essay – Key Strategy Development Tools
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APRIL 23, 2019

1
Introduction
There are four crucial strategic tools that helps a company in order to exchange and execute
their concerned business processes within the competitive market areas. This paper will help
in evaluating the desired need and the uses of these strategic tools such as PESTEL, SWOT,
Ansoff Matrix and porter’s five forces with the help of suitable examples.
PESTEL Strategy Model
The full form of PESTEL is political, economic, social, technological, environmental and legal.
A tool or framework used by the companies for analyzing the factors of external marketing
environment that affects the business is referred to as PESTEL analysis (Fozer et al., 2017).
The model is primarily useful when a new business is going to enter a foreign market. The
political factors may include foreign trade policy, labor law, tax policy, government policy,
environmental laws, political stability and trade restrictions. Economic factors consist of rate of
interests, inflation rate, economic growth, and exchange rate. The factors significantly impact
the organization.
The social factors may involve career attitudes, population growth, health consciousness and
age distribution. These factors directly affect the marketers on their understanding the
consumers. Technological factors can affect the management in different ways such as new
methods of distributing as well as producing goods or services and new ways to communicate
with the target market (Koshesh and Jafari, 2019). Environmental factors involve increasing
scarcity of raw materials or carbon footprint targets. Legal factors contain the rights of the
consumers, health, safety, equal opportunities and advertising standards that should be
known by the company for a successful trade.
Figure: PESTLE ANALYSIS
(Source: Koshesh and Jafari, 2019)
Example of Pestle analysis, Adidas is a firm based in Germany which deals in apparel and
sports shoes. Adidas faced many risks, and its focus in several political factors such as war,
nationalization, and terrorism (Kiełkowska et al., 2018). The economic factors such as
taxation or inflation affect the profit of the company. Its products meet the latest trends, and
the social factors affect the buying habit of an individual which results in decreasing the
revenue. Adidas has been using online websites for selling the products. It also focuses on
the production of sustainable products that help in enhancing brand image. It does not affect
by any legal factors until now.

2
SWOT Analysis
The full form of SWOT is strengths, weaknesses, opportunities, and threats. It is a model or
framework used to identify as well as analyze both internal and external factors. SWOT is
used by the business entities and also by non-profit organizations. The purpose of using this
model to achieve insight into the future and current position of the organization in the market
(Bull et al., 2016). It is a technique used for evaluating the risk, competition, potential, and
performance of the entity. Strength means the internal features that support a successful
result. Weaknesses denote to the internal aspects that work against the effective result of the
company.
Opportunities refer to the external elements that can be used by the business for its
advantages. Threats refer to those external factors that could damage the success of the
business. By using SWOT analysis, a business could focus on the vital factors that affect the
business. A business could address its weaknesses and create several goals as well as
strategies to use the opportunities (Phadermrod, Crowder and Wills, 2019). The entity could
take advantages of its strengths by using a SWOT analysis.
Figure: SWOT ANALYSIS
(Source: Phadermrod, Crowder and Wills, 2019)
For example, Telstra is one of the leading telecommunication in Australia. It has a strong
base in terms of customer service and includes more than 35,000 employees to serve
customers across the world. The strength helps in protecting the existing market share. One
of the weaknesses of Telstra is limited liquidity position. By identifying the weakness with the
help of SWOT, the company could improve its strategy. Increase in demand of the telecom
services is one of the opportunities of Telstra which is identified by using a SWOT analysis.
The major threats identified by using SWOT are high competition and rapid changes in
technology. The company evaluates future events and their impacts on the performance of
the business by SWOT analysis.