Competitive Strategy | Report

Competitive strategy
Name
(Affiliation Institutions)

Introduction
Diverse businesses around the globe use various competition strategy development tools
to scan the environment they are doing business in order for them to gain a competitive
advantage. Recent research conducted by Issa, Chang and Issa, (2010 P.73-80) shown that
businesses that often review their strategic development tools to be aware of the macro and
microenvironment they are operating are more likely to differentiate their processes and products
leading to sustainability and high-profit margins. The strategy development tools that are
commonly used by various organizations to assess the level of competition in the market and
environment of doing a business include PESTEL, PEST, SWOT Ansoff and Five Porter Forces.
Therefore, the essay seeks to examine PESTEL, Five Porters’ Forces of competition and Ansoff
as a strategy development tools that are practically used in the organizational context to examine
competition.
Explanation of the competitive models used in the business
PESTEL
A PESTEL is a business development tool that organizations often use to describes
macro-environmental factors (external factors)that are used in scanning of the environment into
which a business operates or planning to launch a new process, products or service (Yuksel,
2012 p. 52). PESTEL is abbreviated from Political, Economic, Social, Technological, Ecological
and Legal. The combination of the factors forms PESTEL analysis.
PESTEL is used by organizations to assess the external environment. Organizations uses
Political Factors as a component of PESTEL to determine the degree to which a government can
impact a their businesses or industry in which they operates. For example, organizations provides
an assessment of political factors such as taxation, trade tariffs and fiscal policy in order for them
to determine the extent of market profitability and attractiveness. Organization also uses

Economic factors as a component of PESTEL to determine the economic performance of a
country or a region that has a direct impact on a company and which may have long-term effects.
For example, an organization can determine economic factors such as rates of inflation, Gross
Domestic Product (GDP), Foreign Direct Investment, foreign exchange rates and interest rates to
assess the profitability of a market. Organizations also used Social factors as a component of
PESTEL to scrutinize the social environment of the industry or market it operates. According to
Bîrsan, Shuleski and Cristea, (2016 p.2), an organization can determine the social factors such as
demographic, geographic, cultural trends and population to assess the market profitability and
come up with strategies of penetrating or expanding its operations. Organizations also uses Legal
factors as a component of PESTEL to analyse laws that are imposed by a particular country and
which affects the business environment. For example, laws such as labour laws, safety standards
and consumer protection laws may restrict some organizations from operating in a particular
region or country. Organizations also uses Technological factors as a component of PESTEL to
analyse innovations in technology like the current trend of sustainability and disruption
technologies that might affect the way a business operates in a particular market. The
technologies may include Research and Development, automation and awareness of technology a
market possess. Organizations also uses Environmental as a PESTEL factor to assess the
environment or natural disaster that may impact a business. Examples of environment factors
that can lead to businesses incurring losses at a particular region include climate change, floods,
weather and other environmental offsets.
HBSC is a multinational company that often conducts PESTEL analysis before deciding
which market entry or strategy to use in order to successfully penetrate into competitive markets.
For example, before penetrating into New Zealand market, the company company conducted