Competitive Strategy: Tools for Effective Business Management

This article explores the different tools used by companies for effective business management, including SWOT analysis, Porter five force analysis, pestle analysis, and Ansoff strategy. It discusses how these tools help companies analyze their internal and external environments, identify strengths, weaknesses, opportunities, and threats, and make strategic decisions for growth and profitability. The article provides practical examples of how these tools are used by companies like Walmart and Tesco, as well as Apple and Samsung. Overall, these tools are essential for organizations to maintain control over their operational activities and compete in the business environment.

Running head: Competitive strategy
Competitive strategy

Competitive strategy
“Tools that are considered by the management”
It has been investigated that there are different types of tools that are used by the companies in
the present scenario. These tools are mainly used to resolve the complex problems of the
organizations and also maintain control on the entire operational functions. There are many tools
but for this task only four tools are selected such as SWOT ANALYSIS, Porter five force
analysis, pestle analysis and Ansoff strategy. In the present scenario, these are the tools that are
used by the companies as it helps in boosting the growth and profits in the business environment.
The firs tool which is used by the companies is SWOT ANALYSIS. This is one of the popular
tools which are considered by the marketers to evaluate the internal marketing environment of
the company. With the help of this tool it could be easy to analyze the four different elements in
relation to the organizational operations such as strength, weakness, threats and opportunities. It
assists the organizations to compete with the present competitors in the business environment
and also it helps in controlling the similar type of work. By taking into consideration the SWOT
ANALYSIS tool, it is analyzed that the leaders of the business can examine their next move in
relation by analyzing the internal factors of the business. It can be said that this is one of the
famous tool that is used by the multinational and small firms to maintain effective control over
the operational activities of the organization (Gürel and Tat, 2017).
The best practical example can be of WALMART in which it has been seen that the strength of
company is related with the brand image. The company has a good brand image that helps in
boosting the sales of the products and services in the market. WALMART is known as the leader
in the retail sector and also has a wide international presence in the competitive market. The
weakness of the company relates with the less profit margins and also with the business that is
copied by the other companies present in the market. In relation to the opportunities, the
company can easily expand its activities in the developing countries and can also emphasize on
the human resource practice of the company. It is necessary for the company to focus on
bringing improvisation in the quality of the products so that demand can be enhanced in the
market. The threats faced by the company are related to high competition level and with the
online retailers that are present in the market (Porter and Heppelmann, 2014).
2

Competitive strategy
The next tool is Pestle analysis tool that is known as the famous tools considered by the business
to analyze the external aspects of the organization. This model was introduced by Francis
Aguilar and now it is used by the sales department of the company to scan the external business
environment in which the company operates its activities. In reference to these tools, the
marketers evaluate the different factors that impact the overall success of the companies in the
highly competitive business world. This tool focuses directly on the weakness and also the
threats that can affect the operations of the business. Therefore, it is said that this tool also helps
to find out the actual position of the company in relation to the other competitors present in the
market (Oh, Cho and Kim, 2015).
(Source: Business to you, 2019).
Pestle analysis of Tesco Company
It has been analyzed that there are many negative implications that impacted the overall bottom
line of the organization. In 2014, there are many local types of council located in UK market
who asked the government for the new powers in ratio to the overall tax rate. But the government
has not accepted the plans as it avoids the overall increasing ratio in context to price. The
economic factor of the business also impacted the supermarket chain and the overall wage of the
3

Competitive strategy
company accounts to GDP of 4.5 BILLION. Therefore, it is seen that the overall increase in the
national minimum wages in the UK market has enhanced the cost of the company by GDP of
495 Billion.
The social factor of the company focused on offering the products that are healthy for the
customers as nowadays people are more conscious about the health. Tesco considered RFID
technology to enhance the store experience of the customers and also they considered mobile
payment system as it helps the customers to pay their bills easily. The legal factor of the
company stated that company has to consider the laws related to food retailing commission.
Environmental factor of Tesco emphasizes on using the renewable sources so that it could be
easy to maintain the natural resources.
Porter five force models are taken into consideration to evaluate the high level of competition. It
focuses o the overall economies and also there are five forces such as power of suppliers, buyers,
threat of substitute, new entry threat and also the rivalries among the competitors. This force
helps to focus on the different power that lies within the organizational activities. This is
strategic analytics that consider the overall evaluation of the products and services in relation to
the activities of the company (E. Dobbs, 2014).
Apple company example
The bargaining power of the suppliers is weak as there are different suppliers in the market and
they focus on the demand of the products and services. In relation power of buyers, it can be
stated that it is highly impacted by the overall purchasing power and also the power of switching
cost of low (Mukherjee, 2018). It can be simple for the customers to switch to the other products
and services. Threat of substitution is high as there are latest technologies used by the different
competitors to maintain the customer base. Threat of new entry is low as the setup cost is
required is high. In relation to competitive rivalries it can be stated that it is high as the
competitors are various such as Samsung company (Grundy, 2017).
Ansoff strategy
It is known as the planning tools that help the higher authorities to make the strategies that boost
the growth ratio of the company. This strategy is mainly concerned with the products and
4

Competitive strategy
services of the company. The major role is played by the production department as it helps to
give them the brief idea of overall production ratio or the development of the products. With the
help of this strategy it could be possible for the company to attain growth in the highly
competitive business environment. There are four stages in this tool such as diversification, the
market development, penetration and development of the products. These are the stages that are
considered as it helps in introducing the new products in the market (Chiang, Chen and Ho,
2016).
Example of Samsung Company
Market penetration is done by the company in the prices are reduced in few months to launch to
the new model. Market development is done by offering new features in the new models. In
relation to product development the existing products are launched in the market with new
models and designs. Diversifications emphasizes on the range of smart phones offered in the
different segments of the market. So, it is concluded that these tools are beneficial for
organizational growth.
5

Competitive strategy
References
Business to you., 2019.Frameworks. [Online]. Available at:
https://www.business-to-you.com/frameworks/. [Accessed on 1 May , 2019].
Chiang, Y.M., Chen, W.L. and Ho, C.H., 2016. Application of analytic network process and two-
dimensional matrix evaluating decision for design strategy. Computers & Industrial
Engineering, 98, pp.237-245.
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Grundy, T.D., 2017. Dynamic Competitive Strategy: Turning Strategy Upside Down. Routledge.
Gürel, E. and Tat, M., 2017. swot analysis: a theoretical review. Journal of International Social
Research, 10(51),pp.65.
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.
Oh, C., Cho, Y. and Kim, W., 2015. The effect of a firm's strategic innovation decisions on its
market performance. Technology Analysis & Strategic Management, 27(1), pp.39-53.
Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming
competition. Harvard business review, 92(11), pp.64-88.
6