Important Strategy Development Tools for Companies

This essay discusses the four important strategy development tools used by companies: Resource based view, SWOT analysis, Porter five force models, and PESTLE analysis. It provides examples of how these tools are applied in companies like Tata Motors, Amazon, Nestle, and Marks and Spencer. These tools help companies analyze their internal and external environments, evaluate competition, and develop effective business strategies.

Running head: Competitive strategy
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Competitive strategy

Competitive strategy
The main strategy development tools considered by the companies
In this essay, the discussion will be on the important strategy development tools that are used by
the companies. It can be said that there are various strategy development tools that help the
companies to attain the competitive advantage. If these strategy development tools are used then
the resources of the company can also be maintained. The essay will discuss about the four tools
such as Resource based view, SWOT analysis, Porter five force models and PESTLE analysis.
One of the essential strategy developmental tools is Resource based view. It is the managerial
framework that helps to determine the strategic resources in reference to the potential of
delivering the competitive advantage to the company. The resources can also be exploited by the
companies, so it is important to consider this tool. This tool is considered as a way of viewing the
company and in turn of approaching the strategy. By considering this concept, it can be seen that
company can easily analyze the internal environment of the company. Resources of the company
consist of the assets, capabilities and also the process of the organization. Simply, it can be stated
that the resources are known as the inputs that facilitate the company to conduct the activities of
the company (Huang et al., 2015).
Resource based view of Tata Motors
It can be analyzed that it is important to manage the resources of the company assist will help in
boosting the growth of the company. Tata Motors also focuses on providing the features that are
unique and also it is one of the important reasons that help in maintaining the image of the
organization in the competitive market. It is necessary for the organization to boost the market
share so that competition level can be maintained. The value is maintained by the company by
offering discounts in the market. The products of the company are also inimitable as there are
many other competing firms that are using the similar resources used by the company (Mathews,
2016).
The next tool is SWOT ANALYSIS that is used by the companies to find strength, weakness,
threats and opportunities. It is considered as the study that is adopted by the company to evaluate
the competition level prevailing in the market. It can be stated that this tool focuses on
developing the strategic planning that help to maintain the current and potential success ratio.
SWOT ANALYSIS is known as the powerful tool that can assist in making strategic plan for the
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Competitive strategy
company that can also impact the growth of the business. This tool is also the method that helps
to access the performance, competition, risk and potential of the business. By using this tool, the
company can improve the internal aspects of the company that will directly affect the strategic
plans of the company (Menga et al., 2015).
SWOT analysis example of Amazon
Strength
 Strong brand
 Good brand image
 Large market share
 Highest revenue
 Extensive product mix
Weakness
 Limited penetration in the market that are developed
 Business model can be easily imitate
Opportunities
 Penetrate in the developing markets
 Expand the brick and mortar business
 Enhance the measures to minimize the counterfeit sales
 Can enhance the product range offered in the market
Threats
 High level of competition
 Competitors are Amazon and EBay
 Cybercrime
 Imitation
The next tool is Pestle analysis and this is known as important tool as it help to provide in-depth
analysis of the macro environment factor. It is used to evaluate and monitor the macro
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Competitive strategy
environmental factors that affect the performance of the company. It has been seen that this tool
is useful at the time of starting of the new business and it is also considered in collaboration with
the analytical tool such as SWOT ANALYSIS. The political factor focuses on the government
policy, political stability and also corruption. It has been examined that economic factors
emphasizes on interest rates, disposable incomes and also exchange rates. The social factors
emphasize on the growth rate, age distribution and lifestyle attitudes. Technological factor
emphasizes on the innovation and research and development. Environmental factor relates with
ecological and environmental factors such as weather and climate. At last, legal factor focuses on
the specific laws and employment laws that help to maintain the overall activities of the
company (Dominici, 2017).
Example of Nestle Company
1. Political factor
The political affect the growth of the business in the competitive market. The Brexit situation has
thrown a wrench on the plans of the Nestle Company. The instability in the Brexit has also
disrupted the UK food supply chain. It has been seen that this has affected the growth of the
business and also affected the operational activities.
2. Economic factor
In 2018, it has been seen that profits changed from $7.6 Billion to $10 Billion. This has also
helped the company to attain success and growth in the market.
3. Social factor
The company has maintained the image in the market by focusing on the different culture and
trends of the society. It is analyzed that Nestle focused on the values and principles and also
created the tagline such as “Good Food, Good life”.
4. Technological factor
The company focused on e-commerce platform so that it could be easy to boost the demand of
the services.
5. Legal factor
Nestle followed the health and safety laws for the customers so that it could be easy to maintain
the quality standards of the products.
6. Environmental factor
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Competitive strategy
The company organized different campaigns that have helped to maintain the quality of the
products. The company also emphasized on the recycling and packaging issues that pertain in the
society.
The last tool that plays an important role is PORTER FIVE FORCE MODEL. This is one of the
effective tools that are considered by the companies to manage the different factors such as
suppliers, buyers and also the rivalry that exist in the market. This tool identifies and evaluates
the five forces and these forces assist in determining the weakness and strength of the business. It
can be said that this framework is used to evaluate the competitive environment and also guide
the company to consider the effective business strategy that boost the competitive advantage
(Garrette, Phelps and Sibony, 2018).
Example of Marks and Spencer
 Threat of substitute
It is high as the products that are provided by the company can be easily availed by the
customers.
 Bargaining power of the supplier
There are different competitive forces that pushed the company to outsource and just because of
this the cost has been reduced which weakened the suppliers power.
 Competitive rivalry
It is high as there is high competition level in the online segment where the consumers can easily
purchase the products. The competitors are Tesco and Wal-mart.
 Bargaining power of the buyers
It is moderate as the customers are price sensitive and they have low switching cost.
 Threats of new entrants
It is low as there is high requirement of more investment (Mukherjee, 2018).
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Competitive strategy
So, it can be concluded that these are the competitive forces that are important to be considered
by the company. These tools help to manage the activities of the company.
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Competitive strategy
References
Dominici, G., 2017. Systems Thinking Research in the Twenty-First Century: A SWOT
Analysis. International Journal of Systems and Society (IJSS), 4(1), pp.10-18.
Garrette, B., Phelps, C. and Sibony, O., 2018. Structure the Problem: Analytical Frameworks.
In Cracked it! (pp. 95-116). Palgrave Macmillan, Cham.
Huang, K.F., Dyerson, R., Wu, L.Y. and Harindranath, G., 2015. From temporary competitive
advantage to sustainable competitive advantage. British Journal of Management, 26(4), pp.617-
636.
Mathews, J., 2016. An Information Processing View of Competition Analysis. IUP Journal of
Business Strategy, 13(1), p.7.
Menga, E., Dan, A., Lu, J. and Liu, X., 2015.Ranking alternative strategies by SWOT analysis in
the framework of the axiomatic fuzzy set theory and the ER approach. Journal of Intelligent &
Fuzzy Systems, 28(4), pp.1775-1784.
Mukherjee, I., 2018. Applying Porter’s Five Force Framework in Emerging Markets—Issues and
Recommendations. In Strategic Marketing Issues in Emerging Markets (pp. 307-316).Springer,
Singapore.
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