Business Strategy - Internal and External Analysis for Aarete Consultancy Firm

This report discusses the strategies adopted by Aarete, a fast-growing consultancy firm specializing in strategic profitability improvement, digital transformation, and advisory services. The report includes an internal and external analysis of the organization using PESTLE and SWOT analysis, Porter's Five Forces model, and identification of competitive advantage. The report also critically evaluates and justifies strategic options for the organization.

Unit 32 – Business Strategy

Table of Content
Introduction 3
Part A: An internal and external analysis that provides a platform
for strategic decision making: 3-10
1. PESTLE and SWOT of the organization and an evaluation of the
organization’s resources and capabilities 3
2. Competitive environment analysis using Porter’s Five Forces model
6
3. Identification and justification of the organization’s existing and/or potential
competitive advantage 8
4. Valid strategies and tactical objectives to achieve overall strategic objectives
10
Part B: On the basis of this analysis critically evaluate and justify
strategic options for the organization: 10-15
1. Critical evaluation of the different types of strategic directions available to
the organization 10
2. Justification and recommendation of the most appropriate growth platform/s
and strategies 13
3. Evaluate ways and means by which the chosen strategy can be monitored in
order to ensure success 14
5.0 Conclusions 15
References 15

Introduction
Business Strategy is a process to achieve the organizational goals and missions. The set of
plans, goals, and action that set framework for business how to process in particular market
with their product or services. This process is to identify planning, controlling, evaluating of all
the requirements of the businesses. The organization have to evaluate its action so it can
compare with the plans sets (Ahmed, 2018). This report includes the strategies which are
carried out by the consultancy firm Aarete. It’s a fast growing consulting firm growing with
huge financial turnovers. They provide services such as Auditing, advise services, taxation,
legal and interim management consultancy. Report talks about various strategies that company
can use to reach their goals. The strategy they adopted is explained in the report beneath.
Part A: An internal and external analysis that provides a platform for
strategic decision making:
1. PESTLE and SWOT of the organization and an evaluation of the
organization’s resources and capabilities
Aarete is an international management and technology consulting firm specialize in strategic
profitability betterment, digital transformation, and advisory services. Aarete is tier 2
consultancy firm of the globe while they have a vision to make their footprint all over the
world and be in tier 1. Using Pestle analysis, we will analysis the external environment which
is an important factor for the business and its operation, Aarete companies wants to see impact,
as they most deal with government and public. wants to analyze their related external
environment which will make huge implication. Their plan of market action and innovation
growth is by evaluating their external environment, company able to decreased their threats
while increase chances of better opportunities. All of the factor of Pestle analysis are discussed
below:
Political factors This factor critically asses, how a business sector is
influenced by this element which help them in ascertaining
the enterprise's long term sustainability. Some of the
political factors are trade tariffs, fiscal policy, trade
policies, taxation scheme and political instability.
With citation to Aarete company,
which operates in multiple countries which are affected
poorly by political situation and restriction on trade in UK.
Because of a change in the government, Aarete aims to

ensure that the new policies of new government, will help
them to grab the opportunities. Aarete has update its plans
as there has been change in taxation schemes of country
like in India their taxation policy is changed from VAT to
GST, so Aarete Pune India has to work accordingly. This
might leads to a reduced in attracting new foreign direct
investment(forex).
Economic factors This factor directly influenced and determine the economic
performance that affects business sector and its long term
effects. The economic factors included, interest rate,
inflation, exchange rate, GDP and change in demand and
supply of goods. In reference to Aarete, they operate in
only those nation which have high efficiency financial
markets and growing economy (Zhao, 2018).
Social factors This factor of Pestle analysis scrutinizes the culture and
social environment. The organization is highly influenced
by societal measures, cultural trends, political analytics and
demographics. Some examples of social factors are
consumption pattern, demographic and cultural standard.
Aarete did an in depth research about their client needs of
social norms and to increase their goodwill.
Technological factors As per the recent development in market, there is a need of
constant innovation and huge amount of investment in
technologies. This affect the operation of industry
favorably or unfavorably. It is required for companies in
tier 2 like Aarete in order to increase their quality of audit
and use audit software which assist in enhance their
operation and increase productivity. Technological factors
are development, infrastructure, innovation and research.
Legal Factors This factor affects external as well as internal affects.
Legal factors are broader concept than political factor, it
provides in-depth idea of regulation about different laws,
regulatory requirements and laws related to employees and

customers. As Aarete has been operating in many countries
where they comply with regulation of the country in terms
of facing lawsuits, labor law and safety standards. Legal
analysis has to take legislation action for maintain
themselves.
Environmental factors Different markets have different norms or environmental
standards which can affect the profitability of an industry in
those markets. This is a crucial element of Pestle
framework where stakeholder gain their concern on
environmental safety which leads company to follows
regulation and rules regarding environmental laws. Because
of this, Aarete has lead a global climate response against
climate change and pollution which aims to reduced
enterprise global impact. This system has assist Aarete to
work on power saving by some percent.
SWOT analysis is one of the first tool to analysis is a framework which assist companies in
measuring their performance with its benchmark set. It’s a strategic analysis assist them to
measure the internal and external environmental factors. In reference of Aarete, they are highly
relying on quality and accuracy in audit and taxation (Theoharakis, 2019). Though Aarete
works in different sector like public, private, governments, and corporate organization. They
are consulting firm specializing in strategic profitability improvement, digital transformation,
and advisory services. Through this analysis, organization reduces its risks and uncertainties
and they are able to identify major weakness area and strength. Aarete is having modern
technology & data platforms with industry knowledge and technical expertise to create secure,
integrated, AI-driven analytics. All the key elements of SWOT analysis are discussed below:
STRENGTHS
 Aarete has a unique knowledge,
I.e. Management Center is a facility of
intellectual property covering thousands of
projects.
 They have a backup in-house team
of data scientists for the heavy lifting that
WEAKNESSES
 Tough competition from big
business advisor firm as well as other
knowledge consulting agencies.
 Small client list as their
competition in tier 1 takes most of their
client as they have better brand value and

they have to do for modern businesses
requirements.
 They have a deep market
intelligence with a rapid financial turnover
in their tier.
more employees.
 Aarete have difficulties in
presenting effectively in front of big
groups.
 The market intelligence is
focusing more on details and not adequate
enough on the greater picture.
OPPORTUNITIES
Opportunities are frequently the external
areas where you can notice the highest
possibility for the future. Examine
financial, customer, internal and growth
opportunities.
 Third-Party sourcing: Consulting
firms may wish to give third-party
companies on behalf of their own
calculator.
 Identify opportunity in to take
smaller accounting firms to strengthen
orientation in this tier.
 Aarete could diversify from
generic consulting strategy and venture
into other areas of business too.
THREATHS
Threats are general external factors that
can harm or negatively affect the business.
 Consulting firm can be the victim
of a data theft or cybercrime. But if your
consulting firm stock client data on the
servers, the outcome of a data break can be
destructive.
 Bad feedback cause trouble as
there many alternative firm in market and
customer shifts to them.
 Due to Pandemic clients learned
basic consulting services which affect the
growth and profitability.
2.Competitive environment analysis using Porter’s Five Forces model
The porter’s five forces model is described as the framework which is put to use for analysis of
the dynamic environment where the business must deal with various competitors (Soltani,
2020). By implementing the industrial organization economics, the organization can determine
the five forces which defines the industry’s competitive intensity. Furthermore, the model
creates examines five important aspect of the company, which are mentioned below:

 Threat arising due to new potential entrants – The organization will be under threat by
the new entrants, due to the fact that the company in case, that is Aarete, is a local business and
does not hold significant power over the market or the consumers in it. Henceforth, it must
identify the market conditions and observe the chances of new entrants are capable of
adversely influencing the company’s position.
 Threat of substitute products or services – The company will be under threat by the
substitutes which stand similar to the products which they serve. For instance, the management
of the organization concentrates on providing the consultancy services related to information
technology and managerial services, these services are common in the consultancy industry
and presents threat towards the company (Quezada, 2019).
 Bargaining power of the suppliers – Every firm which is involved in providing
relevant and mandatory inputs to the industry is referred to as the supplier, who can deviate the
prices of inputs adversely. The company may be affected by such suppliers, if they outsource
certain services or but fixed assets from such firms. This will impact the overall profit of the
company along with its revenue.
 Bargaining power of the buyers – In any type of industry, the buyers are considered as
the force which impacts the demand and supply flow. When the buyers stand capable of
bargaining the price down, the company must implement adequate methods and policies to
address the same. In the current case, the company may not be adversely impacted due to the
fact that professional services cannot be bargained much.
 Threat of current competitors – Threat exists from the new entrants as well as the
already existing competitors, who could be well established and may hold similar position in
the market, in comparison to the company. Furthermore, the analysis of current competitors
holds the key to effective running of the business processes (Moskovich, 2018.).

3.Identification and justification of the organization’s existing and/or potential
competitive advantage
The company will be impacted by the internal environment which it aims to manage
effectively and efficiently, through analysis of the internal proceedings. Furthermore, the
examination of a company’s internal infrastructure will help identify the strengths and
weaknesses related to the departments as well as the levels in a company. The methods,
techniques, rules, regulations, techniques and provisions followed by the company, which are
applied within the organization, are referred to as the internal environment. To better
understand the concept of internal management and how it will influence the organization in
case, which is Aarete, following analysis is presented, based on the VRIO analysis or
framework.
VRIO analysis
The examination and observation of the internal workings or environment of the company
identifies various advantages or resources which can be used for achieving competitive edge in
the industry and is often referred to as the VRIO analysis. The organization along with the
market where the company operates, will be benefitted by this analysis, also the term VRIO
stands for four factors which establish an entity in the market, that are Value, Rarity, Imitable
and Organization. For Aarete, this analysis can help them develop viable and sustainable plans,
which will strengthen their position in the market, together with, leaving a positive impact
towards the ongoing climate crises (Montenegro, 2018).
Resource
s
Valuable Rare Imitable Organised
Human
resource
Human
resource
Human
resource
* Human
resource
Financial
resources
Financial
resources
Financial
resources
Financial
resources
*
Distributi
on
network
Distributio
n network
Distributio
n network
Distributio
n network
*

Brand
image
Brand
image
* * *
 Valuable – The various functions which the company performs in order to coherently
manage the internal proceedings, can include activities or features, which are considered
valuable for the organization. The features which are crucial and beneficial for the entity, are
often considered as immensely important, due to their capability of earning maximum profits
as well as mitigating the exposure to unfavorable risks. Here the consulting firm, which is
Aarete, has considered their financial and human resources as critically valuable, as the
management can garner better investment values from the external resources, if these financial
resources can be managed through execution of proper resource utilization plans. Furthermore,
the seamless administration of the distribution networks pertaining to the services provided, are
also considered profitable to the company, along with its brand image, which they have firmly
entrenched, through years of quality services and loyalty towards the consumers belonging to
the target market (Liu, 2021).
 Rare – The resources which the company possess, could be unique or rare, if
compared to the industry. This helps the management attain a dominant position in the market,
if they implement resources which stands unique in the market. Furthermore, for Aarete, the
financial and human resources which the company utilizes in the organization are described as
rare, due to the fact that they can be acquired by the competitors, if they also implement
thorough market and industry research. Along with the distribution network, which is effective
due to being systematic and complex in nature, it cannot be easily adopted by the other firms or
companies in the industry, with similar workings.
 Imitable – All of the important resources which are difficult to be imitated by other
organizations, can also stand as a competitive advantage for the company. The services which
Aarete provides includes the constructive and methodical allocation of the financial resources,
which are unique in nature, as discussed before, henceforth acts as a barrier between
competitors and the organization. Moreover, its distribution networks can also crucially benefit
the wealth and position of the company, for a substantial period of time. To keep such
advantages unique, multiple techniques and policies must be executed to ensure the same.
 Organization – For any type of entity, the organization or systematic execution of
operations will often yield desirable results and favorably impact the position of the market.
Aarate has the benefit of systematic and effective utilization as well as organization of human
resources, which can help them gain the lead in the industry. Also, the services provided by the
company are handled by the man-power, who also act as the bridge between consumers and the

management. Therefore, if the employees are capable of providing top class services to the
customers, then the organization can increase its goodwill or reputation (Kuklina, 2021).
4.Valid strategies and tactical objectives to achieve overall strategic objectives
The company can implement Ansoff Matrix Strategy, representing the two-by-two framework
which the financial analysts and management teams, often use to aid them in planning methods
along with examination of the growth prospects available in the industry. To put it in another
words the strategy helps shareholders visualize the degree of risk which is linked with different
types of growth strategies adopted by the company. In the given case, the management should
implement various strategies to develop itself in the industry, such as market penetration,
which defines the measure used for a product or service in comparison to the predictable
market size of such product and services. Furthermore, for Aarete, the market penetration
techniques will help garner relevant consumers who will be able to increase the overall revenue
along with the profit. The management should look out for the new entrants who may enter the
market, due to the fact that market size is large for consulting organizations. In simple words,
Aarete being existing for a significant period of time, can concentrate on expanding its services
in the existing market, through implementing various tools and techniques which can impact
not only the short term position but also the wealth of the entity through establishing
themselves in the share market. Moreover, the market development technique can also be
adopted to impact the shares of the company together with the idea of launching or promoting
the existing products in a new market space or a different geographical area. In this manner the
organization can encompass new audience and expand its business nationally and
internationally as well. Through the product development technique, the company should
launch newer products in the existing market, if they wish to gain the upper hand over the new
or existing competitors (Jiang, 2022).
Part B: On the basis of this analysis critically evaluate and justify
strategic options for the organization:
1. Critical evaluation of the different types of strategic directions available
to the organization
The following strategies could be adopted by the management to plan their internal or external
procedures efficiently and effectively:
Porter’s Generic Strategy – The strategy helps management of an organization or in this
case, Aarete, to better understand the dynamic environment and underlying conditions which

can aid the company in gaining competitive advantage over the other similar organizations.
Following are the strategies relevant to the company:
 Differentiation strategy – This method is described as the various plans which the
management adopts to gain a unique and dominant position in the market or to simply identify
the capabilities which only the company yields. To help Aarete gain this strategic advantage,
the company should lay emphasis on innovations, research and development techniques. In this
manner, the organization can avoid unfavorable conditions which may influence their market
position or result in wastage, losses and malpractices (Jain, 2018).
 Cost Leadership – By decreasing the costs of all types of services which the company
provides its consumers, the profit can be significantly increased. In case of Aarete, the decision
to lower the costs, will favorably deviate the value of its common stocks in the share market,
along with an increase in the investors, due to the fact that the company will be able to nurture
its long term position and provide growth prospects for the investors. The lowered cost will
directly decrease the price of the services and in return benefit the company through better
sales and profit.
McKinsey 7S model
This model defines the framework which is implemented for examination of the effects which
may impact the organization, as a result of prospective succeeding changes in the organization.

 Structure – The multiple methods and procedures applicable in the organization,
which are specifically designed for administration of activities, is the structure. For Aarete, the
various methods implemented for ensuring seamless and systematic performance by the
employees, the company should concentrate on making various relevant provisions, which
helps them maintain the flat hierarchy, to encourage employees for being more confident and
feel secure about their role in the company.
 Skills – The different kinds of skillsets, competencies and abilities which the
employees are equipped with, is crucial important for the organization, as they could be the
unique competitive advantage, which may be used as a tool to win over the cut-throat
competition in the industry and ensure success. For Aarete, the individuals who work of the
company, are adequately trained by the company, through development programs, so that they
could be in line with the current environment and problems it contains (Hristov, 2022).
 Strategy – This is defined as all of the techniques and tools adopted by the
management for effective and efficient fulfillment of the business proceedings. For all the
members and employees of the company, it is important to follow the relevant strategy,
designed for a specific activity or project. To improve such aspects of the management should
implement communication and collaboration techniques, due to the fact that communication
between the employees at every level are also identified as crucially important, so as to execute
every step efficiently.

 System – The various technical systems or the software used by the management to
implement and execute strategies which are part of the organizational structure are defined as
the system of the company. Aarete, has successfully developed a proper and distinguished
system, which helps the employees perform coherently. Also, the system helps keep an eagle
eye view of the operations performed at all levels of the company, as the management software
keep track of the all the significant workings in the company.
 Shared Values – For any type of organization, the values which employees share with
each other are the ones to maintain, throughout the running of the business. Here the
management of Aarete aims at achieving the all of the customs and beliefs which are
mandatory to be followed, such as following the rules and regulations of the company as well
as the government. Furthermore, the company also supports creative thinking and flexibility in
the organization.
 Staff – The human resources or the man-power, which is required by the company to
deal with the day to day and the long term activities, is referred to as the employees of the
organization. Such individuals are selected on the basis of their skills and knowledge, as well
as the experience, which they have gained over the years. To help the new-comers perform
operations in line with the current technology and procedures, Aarete aims at providing
training and development sessions (Dalwai, 2021).
 Code of Conduct – The rules and regulations, procedures and methods adopted by the
top level management or by those charged with governance, is called the code of conduct.
These rules, are necessarily to be followed by every individual engaged in activities of the
company, in case of Aarete. As such rules enhance quality of work and avoid any kind of
fraudulent activities, which may be able to threaten the going concern concept for the entity.
2.Justification and recommendation of the most appropriate growth platform/s
and strategies
Strategic Planning – This could be defined as the process adopted for effective execution of
the plans and achieving the mission along with the vision of the company. For Aarete, the
following is the strategic plan developed to define the future path which they will follow:
 Vision – “To establish themselves as the monopolistic and well known consultancy
company, who would concentrate on loyalty to consumers and priority towards optimal
utilization of resources.”
 Mission – The mission of Aarete is to develop themselves in the oversees market as
well, through expansion and diversification strategies, while laying emphasis on providing
quality services to the customers. Following objectives can be defined for the company:

 Raising the sales for the upcoming years, up to 14%.
 Management of the retention of the consumers.
 Strategy – The STP model, or the examination of Strength, Target, Positioning
technique related to the organization in case, that is Aarete, will be characterized as the strategy
(Amit, 2020). The company is well established nationally, through implementation of methods
which are a mix of geographic and demographic condition mappings, to provide top class
services to its clients.
3. Evaluate ways and means by which the chosen strategy is can be
monitored in order to ensure success
For ensuring whether the chosen strategy is effectively implemented and followed in the
company, the management should concentrate on monitoring the same through effective and
efficient tools and techniques, which could be impacting the overall business structure. Here,
the McKinsey framework, can be defined as extremely beneficial to the company, for
comprehending the internal proceedings, along with the methods to improve the same. This
will also facilitate the administration of all of the relevant policies, regulations and provisions,
which are applied within the organization (Akindayomi, 2022).

5.0 Conclusions
The following report presents the analysis of the various techniques and methods which are
applicable for Aarete, a consultancy firm. Here, the strategies discussed and implemented, lays
down emphasis on the strengths, weaknesses, threats and opportunities, which the company
will face in the industry. Furthermore, the report helps identify the areas where it can improve
for establishing themselves as well as mitigating the chances of malpractices.
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