Analyzing Competitive Strategy: SWOT, PESTEL, Porters Five Forces, and PROFIT Model

This essay analyzes different strategic tools such as SWOT, PESTEL, Porters Five Forces, and PROFIT Model that help companies gain a competitive advantage in the market.

Running head: COMPETITIVE STRATEGY
Competitive Strategy
Name of the Student
Name of the University
Author note

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COMPETITIVE STRATEGY
Introduction
The essay throws light on analysing different strategic tools which play a
major role in improving business operations and helping the companies to gain
competitive advantage in market. The different strategic tools which will be
discussed in the essay include SWOT, PESTEL, and Porters Five Forces Model
along with PORFIT model. Moreover, the strategic tools play a vital role in estimating
the opportunities as well as threats that can affect the overall effectiveness of the
business sand it will lead to loss for the business. Moreover, the framework is helpful
in prioritization of the different complex organizations and providing framework for
assessment of relative importance of the aspects.
SWOT Analysis
The SWOT analysis is defined as framework utilized to evaluate competitive
position of organization and development of strategic planning. Moreover, SWOT
analysis assesses external and internal factors which analyses the current and future
potential of companies (Salavou 2015).
Strengths- The strengths of the companies are the different resources along
with capabilities which can be utilised as the basis for the proper development of
competitive advantage (Noe et al. 2017). The different examples of strengths include
patents, strong brand image, good reputation among the different customers.
Weaknesses- It is inclusive of aspects which stops the organizations from
performing at an optimum level and they are the different areas wherein the business
requires improvement to remain competitive (Namada2018).

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Opportunities-It includes variables that include opportunities and it will
showcase different current challenges faced by company and provide them different
approaches which will make them competitive (Mi 2015).
Threats- It is inclusive of the different external competition present in the
market that is beyond the control of the company and major issue faced by the
companies is rivalry and there can be different downturns in financial aspects which
can affect the overall effectiveness of the business. For instance- SWOT of
Samsung:
Strengths
It offers lots of models and it has huge brand recognition (Mi 2015)
Weaknesses
There are different issues relating to intense competition
Opportunities
Adopting new technologies which will improve the product
Threats
The market of mobile phones is dynamic and there can be failure (Mi 2015)
PESTEL Analysis
Political Factors-It is helpful in determining current position of various
political parties that can create huge influence on growth of the business both
positive or in a negative manner (Menonand Yao 2017).

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Economic Factors- It is inclusive of examining various effects of the taxes
and interest rates. Moreover, behaviour of customers is analysed in terms of the
economic factors and gain more knowledge regarding the same appropriately.
Social Factors- It includes the different areas which include the shared
beliefs as well as attitudes of the entire population. The various factors are the
growth of the population, age distribution, attitudes towards the career (Laari,
Töyliand Ojala 2018).
Technological Factors- It includes the evaluation of the current technological
aspects that can be utilized by the organizations to analyse the new techniques of
producing the goods and services (Karami 2016).
Legal Factors- There are different factors such as health and safety laws,
advertisement related standards along with product labelling and safety which can
create a massive impact on the business.
Environmental Factors- It is inclusive of the different kinds of factors such as
identifying the different types of environmental rules and regulations that can affect
the business appropriately (Dodgson 2018).
For instance-ZARA
Political
Political Stability
Economic
Fluctuating Economy
Social

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The standard of living of people is high
Technological
Launching of different apps for customer feasibility
Legal
Analysis of the different kinds of legal laws and legislation regarding fashion
Environmental
Asian countries require immediate fashion change
Porter’s Five Forces Model Analysis
Threats of the new entrants- It is the first aspect which is required to be
identified by the companies as there are times when the different new companies
have been able to take the position in the market straightforwardly. The new entrants
have considered the respective position by offering similar products at a cheaper
rate (Dodgson 2018).
Threat of Substitution-It is the other aspect which is required to be analyzed
by the companies as there can be other similar companies with similar businesses.
These companies can offer such products to the customers at a cheap rate, and
similar quality will be provided to the customers and it can be a huge threat (Danso
et al. 2019).
Bargaining Power of Buyers- It is the aspect which examines the consumer
power along with the effect on the quality and pricing. The different customers have
the power to drive down the prices and the various products which are offered by the
company should become useful in the respective approaches.

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Bargaining power of Suppliers-It is the aspect in which the organization
judges the supplier's potentiality as the companies look for the complete uniqueness
of the products. It can take place when there are a smaller number of suppliers, and
become a threat for the new companies, that will be helpful for other competitors
already present in the market (Danso et al. 2019).
Competitive Rivalry-It is the last aspect which will be helpful for the different
organizations to understand the various competitive factors of the other competitors.
It can be judged through the analysis of the different products and services which are
sold by those companies (Karami 2016).
For instance- The porters five forces model analysis of Apple is inclusive of
the following aspects which are as follows:
Competitive Rivalry
High aggressiveness of the different companies is high
Bargaining Power of Buyers
High information of buyers is the strong force
Bargaining Power of Suppliers
Moderate to high number of suppliers is weak force
Threat of Substitutes
Low performance of the different substitutes is the strong force
Threat of New Entrants
High cost of brand development is the weak force

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PROFIT Model
It is essential which is utilized by the different companies in such a manner
which helps interpret the financial performance and appropriately return on net
worth. Moreover, the major competitive advantage is the overall ability of the
company which will be helpful in producing the different goods as well as services
better than the other competitors in the market. Furthermore, the unique business
model helps in showcasing the different competitive factors which plays a major role
in gaining profitability in comparison to the competitors and improve the business
operations to become successful. In the respective Profit model, the key three
components which are being employed which can be controlled by the management
are as follows:
Profit Margin- It helps the companies in efficiently analysing the overall
effectiveness of the different manufacturers along with selling the products (Mi 2015)
Asset Turnover- It helps in explaining how the firm employs the different
assets effectively and turn the same into sales (Laari, Töyli and Ojala 2018)
Financial Leverage- It helps in examining and identifying how the
management of the company tries to use the outside financing effectively
(Menonand Yao 2017)
For instance-Apple uses the PROFIT Model which has proved to be useful in
the management of business operations in comparison to Samsung which is the
biggest competitor in the market. Apple Inc uses the Blue Ocean Strategy which
assists them in becoming more competitive in the business operations. With the

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implementation of the blue ocean strategy, the company has been able to improve
the different business operations and gain competitive advantage.
Conclusion
Therefore, it can be concluded that SWOT, PESTEL, Porters Five Forces and
PROFIT model plays a beneficial role in improving the different business operations
successfully. The different examples have proved to be helpful in gaining insights on
their approaches which will be beneficial. Moreover, from the different practical
examples, it can be identified that it will be helpful in improving the business
operations in an appropriate manner as it helps the organization to become
successful in managing the different operations. It increases the awareness of the
overall business environment, analysing the strategic issues and threats which can
affect the profitability of the firm.

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References
Danso, A., Adomako, S., Amankwah‐Amoah, J., Owusu‐Agyei, S. and Konadu, R.,
2019. Environmental sustainability orientation, competitive strategy and financial
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Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalisation in innovation. Routledge.
Karami, A., 2016. Strategy formulation in entrepreneurial firms. Routledge.
Laari, S., Töyli, J. and Ojala, L., 2018. The effect of a competitive strategy and green
supply chain management on the financial and environmental performance of
logistics service providers. Business Strategy and the Environment, 27(7), pp.872-
883.
Menon, A.R. and Yao, D.A., 2017. Elevating repositioning costs: Strategy dynamics
and competitive interactions. Strategic Management Journal, 38(10), pp.1953-1963.
Mi, J., 2015. Blue ocean strategy. Wiley Encyclopedia of Management, pp.1-1.
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Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M., 2017. Human resource
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Salavou, H.E., 2015. Competitive strategies and their shift to the future. European
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