Competitive Forces: PESTLE, Porter Five Forces, SWOT and Generic Strategies

This article discusses the strategic management tools like PESTLE, Porter Five Forces, SWOT and Generic Strategies and how they help in identifying the external and internal business factors that impact the organizations. It explains the elements of each tool and how they can be used to gain competitive advantages. The article also highlights the limitations of these tools.

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Competitive forces
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PESTLE analysis
Pestle analysis is one of the most popular strategic management tools being used in the
current business scenario. This is due to the reason of diverse and alternative usages of this tool.
Pestle analysis is majorly being used to identify the external business factors that will have
influence on the business operations. The first element of this framework is political factors,
which denotes the political environment in the host region (Ho, 2014). For example, Coles is
operating across Australia and they are having the need for understanding the political
environment in the country such as stability and chances of emergence of issues with the
government. Hence, determinations of the political environment through the pestle analysis will
Coles to identify the key trends. The next element is economical factors, which refers to the
issues such as competition, market growth, tax rates and investment decisions that will impact
the organizations. It is important for Coles to have the understanding about the extent to which
they will be affected by the economical factors such as competition. Accordingly, they can
design their strategies in the long term (Aithal, 2016).
Social factor is the next element in the pestle analysis, which states about the taste and
preference pattern of the customers in influencing the business. Coles is offering diverse range of
consumer goods and thus it is important for them to cope up with the current trends of customer
preferences. This will ensure that their product and business strategy will be in line to the market
trends and the probability of getting positive return will be more. Moreover, determination of the
social factors will also help Coles to have the understanding about the acceptances of their
products in the market. The next factor is the technological factors, which refers to the impact of
the technological advancements on the business. In the current scenario, this factor is beneficial
for the business due to the reason that technology is rapidly developing and improving (Fozer et

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al., 2017). In the case of Coles, this element will help them to have the idea about the current
standards of technologies being used in the industry and accordingly they can develop their own.
The next element is legal factors that refer to impact of legal formalities and regulations in the
business operation. The last element is the environmental factors, which is also important in the
current time as because the sustainability is majorly focused. This factor will enable Coles to
identify the impact of sustainable practices in their business viability. Thus, it can be concluded
that pestle analysis can help the business entities in having the overall understanding about the
impact of the external business environments. However, on the other hand, this framework is
generalized in nature and not provides any specific considerations, which led to the fact that
concrete decision making on the basis of pestle is difficult.
Porter five forces
Porter five forces analysis is strategic tool being used in determining the competitive
forces and their impact on the business. This tool is having five elements, which represents the
five competitive forces to be faced by the business organizations. The first force is the bargaining
power of the buyers, which states about the influence that buyers are having over dealing with
the brand (Dobbs, 2014). For example, the extent to which the buyers are having the upper hand
in influencing the business viability of Qantas is termed as bargaining power of the buyers. The
higher will be the bargaining power of the buyers, the more will be the challenges for Qantas in
their business decisions. The next element is the bargaining power of the suppliers, which states
that extent to which the suppliers can influence in the business decision of Qantas. In this case
also, the higher will be the influence of the suppliers, the more challenging it will be for Qantas
in their business decisions. The next element is the threat of new entrants, which refers to the
extent to which the businesses are facing the threat of entry of new entities in the market. In the

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case of Qantas, entry of the new entities in the market will increase the competition for them and
will affect their profit margins (Porter & Heppelmann, 2014). The next element is the threat of
substitutes that refers to the extent to which the substitute firms are posing challenges. In the case
of Qantas, the threat of substitutes is high as there are other airliners also offering the same
services. The last element is the competitive rivalry that states about the level of competition
present in the market. The more will be the competition and presence of competitors in the
market, the more will be the rivalry among them. Thus, it can be concluded that with the help of
the porter five forces analysis, the major competitive forces can be identified for the business
(Utami & Lantu, 2014). However, on the other hand, this analysis does not consider the other
market factors such as differentiated market approach, which is restricting its effectiveness.
SWOT analysis
Swot analysis is another popular strategic management tool being used by the business
organizations. This tool is having four elements that discusses about the internal business
environment for the organizations. In addition, this tool also helps in identifying the areas of
strength and improvement for the organizations. The first element is the strength, which defines
the advantages that the entity is having over their competitors. For example, the competitive
factors of Woolworths over their competitors are their strengths. The next element is weakness,
which refers to the areas of improvement for Woolworths and the areas where they are lacking
behind their competitors (Bull et al., 2016). This helps in identifying the areas of weakness and
mitigating them. The next element is the opportunities that define the potential advantages that
can be gained by Woolworths in the future. Thus, according to the identified factors, strategies
can be initiated to tap the opportunities. The last element is the threat that denotes the potential
challenges that might be faced by Woolworths in the coming years. Thus, it can be concluded

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that swot analysis helps in determining the key positive and negative factors relevant for the
business.
Generic strategies
Porter generic strategies are the three major sources of gaining competitive advantages
for the business organizations. The first factor is the cost leadership strategy that states about
offering goods in lowest price possible and cater to the maximum market share. This helps in
gaining larger market share. TechnologyOne can initiate the cost leadership strategy in
increasing their sales volume and penetrating in the market. The next factor in this model is
differentiation by which TechnologyOne can offer distinctive services to have unique value
proposition and stay ahead in the competition (Kaya, 2015). The last factor is the market focus,
which states that TechnologyOne can target a specific target segment and offer services
according to their requirements and expectations. This will ensure that customer loyalty and
satisfaction is more for them. Thus, with the help of this model, TechnologyOne can identify
their suitable and ideal source of gaining competitive advantages. However, it should also be
noted that apart from these three factors, there are other factors such as technologies can also
contribute in gaining advantages, which are not considered in this model.

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