Comprehensive Strategy: PESTEL, SWOT and Porter's Five Forces Analysis
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AI Summary
The given essay will concentrate on the various strategic tools and their analysis. The business environment is quite dynamic and for this reason it is extremely important for any business enterprise to ensure that it conducts a research on the external environment of the business such that it is able to get the relative factors in place to form a comprehensive strategy for the business.
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Running head: COMPREHENSIVE STRATEGY
COMPREHENSIVE STRATEGY
Name of the Student:
Name of the University:
Authors Note:
COMPREHENSIVE STRATEGY
Name of the Student:
Name of the University:
Authors Note:
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1COMPREHENSIVE STRATEGY
Executive Summary
The given essay will concentrate on the various strategic tools and their analysis. The business
environment is quite dynamic and for this reason it is extremely important for any business
enterprise to ensure that it conducts a research on the external environment of the business such
that it is able to get the relative factors in place to form a comprehensive strategy for the
business. The essay conducts the analysis using PESTEL, SWOT AND Porters Five Forces
Model. The given tools provide comprehensive data on the external factors effecting a business
organization and ways to combat these factors.
Executive Summary
The given essay will concentrate on the various strategic tools and their analysis. The business
environment is quite dynamic and for this reason it is extremely important for any business
enterprise to ensure that it conducts a research on the external environment of the business such
that it is able to get the relative factors in place to form a comprehensive strategy for the
business. The essay conducts the analysis using PESTEL, SWOT AND Porters Five Forces
Model. The given tools provide comprehensive data on the external factors effecting a business
organization and ways to combat these factors.
2COMPREHENSIVE STRATEGY
Introduction
In the recent complex comprehensive environment, it is a huge challenge for all the
business organization to lay more emphasis on their strategic plan. The firms must have various
analytical tools to identify all those factors that would affect the business environment. This
essay acknowledges the value of strategic analytical tools in relation to the comprehensive
analysis at the firm level, industry level and macro environment al level. PESTEL analysis
framework Porter five forces model and SWOT analysis will be discussed to analyze the
strategic direction of a firm in such comprehensive business environment (Albert and Grzeda
2015).
PESTEL Model
PESTEL model is the strategic tool that is used to analyze the macro environment. It is
one of the most popular and widely used concepts used in comprehensive and strategic analysis
(Shah et al. 2015). The concept of PESTEL model originally came from the PEST model. It is a
significant method that includes all the major factors, which is influenced by the organization
and industry. Initially, the PEST framework encompasses the following four factors as Political,
Economical, Social and Technological. Later on, the framework further considered other two
vital factors, which are Environmental and Legal factors.
Political factors include all the government regulation and policies of the retail industry
that affects its profitability and revenue. Political environment affects supply chain of a business
at an international level and also the economic environment of the nation. In the retail industry,
political issues create a major hindrance to the existing smooth business operation. Economic
factors are also crucial in relation to the business and trade. Better economic scenario showcases
increase in sales and thus leads to complete and effective outcome in the retail industry
(Goncharuk 2016). The labor market and consumers income creates a major impact on boosting
the profit of the industry. Social factors also affect the profitability of the retail industry. Change
in the preferences of the consumers and demographic changes creates a deep impact on the
business.
In the recent times, the demand of the new generation is very different than that from the
older generations. Major focus is recently given on maintaining customer’s engagement and
Introduction
In the recent complex comprehensive environment, it is a huge challenge for all the
business organization to lay more emphasis on their strategic plan. The firms must have various
analytical tools to identify all those factors that would affect the business environment. This
essay acknowledges the value of strategic analytical tools in relation to the comprehensive
analysis at the firm level, industry level and macro environment al level. PESTEL analysis
framework Porter five forces model and SWOT analysis will be discussed to analyze the
strategic direction of a firm in such comprehensive business environment (Albert and Grzeda
2015).
PESTEL Model
PESTEL model is the strategic tool that is used to analyze the macro environment. It is
one of the most popular and widely used concepts used in comprehensive and strategic analysis
(Shah et al. 2015). The concept of PESTEL model originally came from the PEST model. It is a
significant method that includes all the major factors, which is influenced by the organization
and industry. Initially, the PEST framework encompasses the following four factors as Political,
Economical, Social and Technological. Later on, the framework further considered other two
vital factors, which are Environmental and Legal factors.
Political factors include all the government regulation and policies of the retail industry
that affects its profitability and revenue. Political environment affects supply chain of a business
at an international level and also the economic environment of the nation. In the retail industry,
political issues create a major hindrance to the existing smooth business operation. Economic
factors are also crucial in relation to the business and trade. Better economic scenario showcases
increase in sales and thus leads to complete and effective outcome in the retail industry
(Goncharuk 2016). The labor market and consumers income creates a major impact on boosting
the profit of the industry. Social factors also affect the profitability of the retail industry. Change
in the preferences of the consumers and demographic changes creates a deep impact on the
business.
In the recent times, the demand of the new generation is very different than that from the
older generations. Major focus is recently given on maintaining customer’s engagement and
3COMPREHENSIVE STRATEGY
attention by the retailers. Technological factors in the current times are more crucial whether in
terms of customer services, sales or supply chain. The latest advent of technology and rapid
growth of digital technology has lead to increase in the number of competitors in the retail
industry (Zhao, Pan and Chen 2018). Firms are trying to use better technology for maximizing
customer’s satisfaction. Legal factors are also relevant for the retail industry. Various laws
related to the employment and business affects the business of the organization to a large extent.
To remain comprehensive in the business environment the organizations have to maintain quite
low prices. Both Walmart and Amazon have to deal with fair share of Legal issues in the past.
The six factors is highly powerful and useful tool that is widely applied in marketing
planning, business planning, organizational change and product development. In business
planning the PESTEL analysis provides important information related to target such as growth,
brand positioning and new product development for the organization and managers. PESTEL
analysis framework is used for comprehensive analysis at the macro environmental level
(Jensenn 2016).
SWOT Analysis
SWOT analysis stands for the Strengths, Weaknesses, Opportunities and Threats and the
model has also various applications in the real world. It is widely used to evaluate a product
segment, business plan and marketing strategy. It is a powerful planning tool and is widely used
in the marketing and business areas. Like any other businesses, the retail industry often analyzes
the strength, weaknesses, opportunities and threats to gain comprehensive advantages in the
market place.
The strength and weaknesses of a firm are considered as an internal factor and the
opportunities and threats are considered to be the external factor. These factors highlight both the
positive and negative situations that the firm faces continuously. The strength of the retail sectors
are generally access to bank loans and adequate capital. The purchasing power of the consumer
is strength for the business. The weakness faced by the industry includes political uncertainty as
well as regulatory requirements. Supply chain management and poor infrastructure also proves to
be a major weakness of the organization (Arabzad et al. 2015).
attention by the retailers. Technological factors in the current times are more crucial whether in
terms of customer services, sales or supply chain. The latest advent of technology and rapid
growth of digital technology has lead to increase in the number of competitors in the retail
industry (Zhao, Pan and Chen 2018). Firms are trying to use better technology for maximizing
customer’s satisfaction. Legal factors are also relevant for the retail industry. Various laws
related to the employment and business affects the business of the organization to a large extent.
To remain comprehensive in the business environment the organizations have to maintain quite
low prices. Both Walmart and Amazon have to deal with fair share of Legal issues in the past.
The six factors is highly powerful and useful tool that is widely applied in marketing
planning, business planning, organizational change and product development. In business
planning the PESTEL analysis provides important information related to target such as growth,
brand positioning and new product development for the organization and managers. PESTEL
analysis framework is used for comprehensive analysis at the macro environmental level
(Jensenn 2016).
SWOT Analysis
SWOT analysis stands for the Strengths, Weaknesses, Opportunities and Threats and the
model has also various applications in the real world. It is widely used to evaluate a product
segment, business plan and marketing strategy. It is a powerful planning tool and is widely used
in the marketing and business areas. Like any other businesses, the retail industry often analyzes
the strength, weaknesses, opportunities and threats to gain comprehensive advantages in the
market place.
The strength and weaknesses of a firm are considered as an internal factor and the
opportunities and threats are considered to be the external factor. These factors highlight both the
positive and negative situations that the firm faces continuously. The strength of the retail sectors
are generally access to bank loans and adequate capital. The purchasing power of the consumer
is strength for the business. The weakness faced by the industry includes political uncertainty as
well as regulatory requirements. Supply chain management and poor infrastructure also proves to
be a major weakness of the organization (Arabzad et al. 2015).
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4COMPREHENSIVE STRATEGY
There are various opportunities for the retailers nowadays and the most significant of
them is application of digital strategy. Application of digital strategy helps in improved
interaction with the employees besides customer engagement. Whereas, the various threats that
affects the organization or firms are availability of land, fierce competition, human capital
management (Kangas et al. 2016). Threats often lead to reduce the consumers demand, price
wars and recession. Even change in the shopping habits of the customers is also a major threat to
the retailers.
Porter`s Five Forces
Porter’s five forces are used to determine the comprehensiveness of a given market and
thus ascertaining how profitable it can finally be for a business. This strategic model focuses on
five factors better known as ‘five forces’. These five forces include buyer power, supplier power,
comprehensive rivalry, threats of new entrants and threats of substitutions (Borland et al. 2017).
The bargaining ability of the buyers can push down the prices or switch retailers and even they
would not buy the products. In the retail industry bargaining power of a buyer is a relatively
larger force. The customers demand high quality products at low and affordable prices.
The bargaining power of supplier is an insignificant force and has very little power. The
suppliers have quite less or low control in the fashion industry. The bargaining power of buyer is
moderate as the concentration and size of the major retailers (Wolf and Floyd 2017). In retail
industry, to retain customers and reduce customers, the retailers seek to create strong brands and
differentiate the products. Completion rivalry is very high in the retail industry as there are
various competitors selling the similar products in the market. Brand recognition is used by the
retailers to differentiate its products and maximize revenue.
Threats of new entrants are another major factor that is faced by the industry. The retail
industry is currently under the state of high risk and high reward for the new entrants (Gans and
Ryall 2017). Threat of Substitution is the last factors of Porter five forces framework. In the
retail industry, it is often seen that they do not specialize in a particular good or services but
deals in variety of products and services. Retailers offer products that are unique and have an
absolute or distinct advantage over its competitors.
There are various opportunities for the retailers nowadays and the most significant of
them is application of digital strategy. Application of digital strategy helps in improved
interaction with the employees besides customer engagement. Whereas, the various threats that
affects the organization or firms are availability of land, fierce competition, human capital
management (Kangas et al. 2016). Threats often lead to reduce the consumers demand, price
wars and recession. Even change in the shopping habits of the customers is also a major threat to
the retailers.
Porter`s Five Forces
Porter’s five forces are used to determine the comprehensiveness of a given market and
thus ascertaining how profitable it can finally be for a business. This strategic model focuses on
five factors better known as ‘five forces’. These five forces include buyer power, supplier power,
comprehensive rivalry, threats of new entrants and threats of substitutions (Borland et al. 2017).
The bargaining ability of the buyers can push down the prices or switch retailers and even they
would not buy the products. In the retail industry bargaining power of a buyer is a relatively
larger force. The customers demand high quality products at low and affordable prices.
The bargaining power of supplier is an insignificant force and has very little power. The
suppliers have quite less or low control in the fashion industry. The bargaining power of buyer is
moderate as the concentration and size of the major retailers (Wolf and Floyd 2017). In retail
industry, to retain customers and reduce customers, the retailers seek to create strong brands and
differentiate the products. Completion rivalry is very high in the retail industry as there are
various competitors selling the similar products in the market. Brand recognition is used by the
retailers to differentiate its products and maximize revenue.
Threats of new entrants are another major factor that is faced by the industry. The retail
industry is currently under the state of high risk and high reward for the new entrants (Gans and
Ryall 2017). Threat of Substitution is the last factors of Porter five forces framework. In the
retail industry, it is often seen that they do not specialize in a particular good or services but
deals in variety of products and services. Retailers offer products that are unique and have an
absolute or distinct advantage over its competitors.
5COMPREHENSIVE STRATEGY
Conclusion
The three powerful and commonly used comprehensive analysis and strategic tools has
its own importance in getting a clear knowledge about the business environment. Through
PESTEL analysis the market condition at macro-environmental has been ascertained. SWOT
model helps in analyzing the business condition at the firm level of the retail industry. Both the
internal and external analysis has been identified. While the Porter five forces model illustrated
the different sources of comprehensive forces existing in the retail industry. Thus from the essay
it has been ascertained from the porter’s model that in the retail sector the barriers to entry are
relatively high. It is therefore significant for all the firms to lay more attention to its strategic
plan.
Conclusion
The three powerful and commonly used comprehensive analysis and strategic tools has
its own importance in getting a clear knowledge about the business environment. Through
PESTEL analysis the market condition at macro-environmental has been ascertained. SWOT
model helps in analyzing the business condition at the firm level of the retail industry. Both the
internal and external analysis has been identified. While the Porter five forces model illustrated
the different sources of comprehensive forces existing in the retail industry. Thus from the essay
it has been ascertained from the porter’s model that in the retail sector the barriers to entry are
relatively high. It is therefore significant for all the firms to lay more attention to its strategic
plan.
6COMPREHENSIVE STRATEGY
References:
Albert, S. and Grzeda, M., 2015. Reflection in strategic management education. Journal of
Management Education, 39(5), pp.650-669.
Arabzad, S.M., Ghorbani, M., Razmi, J. and Shirouyehzad, H., 2015. Employing fuzzy TOPSIS
and SWOT for supplier selection and order allocation problem. The International Journal of
Advanced Manufacturing Technology, 76(5-8), pp.803-818.
Bell, G.G. and Rochford, L., 2016. Rediscovering SWOT’s integrative nature: A new
understanding of an old framework. The International Journal of Management Education, 14(3),
pp.310-326.
Borland, H., Ambrosini, V., Lindgreen, A. and Vanhamme, J., 2016. Building theory at the
intersection of ecological sustainability and strategic management. Journal of Business
Ethics, 135(2), pp.293-307.
Gans, J. and Ryall, M.D., 2017. Value capture theory: A strategic management review. Strategic
Management Journal, 38(1), pp.17-41.
Goncharuk, A.G., 2016. Banking sector challenges in research. Journal of Applied Management
and Investments, 5(1), pp.34-39.
Jensen, A.B., 2016. Business Modelling as aWay Forward for Strategic Management Processes-
A Case Study of SME’s. Journal of Multi Business Model Innovation and Technology, 4(1),
pp.1-34.
Kangas, J., Kajanus, M., Leskinen, P. and Kurttila, M., 2016. Incorporating MCDS and voting
into SWOT: Basic idea and experiences. Serbian Journal of Management, 11(1), pp.1-13.
Lechner, C. and Gudmundsson, S.V., 2014. Entrepreneurial orientation, firm strategy and small
firm performance. International Small Business Journal, 32(1), pp.36-60.
Shah, S.T.H., Jamil, R.A., Shah, T.A. and Kazmi, A., 2015. Critical Exploration of Prescriptive
and Emergent approaches to Strategic management: A review paper. International Journal of
Information, Business and Management, 7(3), p.91.
References:
Albert, S. and Grzeda, M., 2015. Reflection in strategic management education. Journal of
Management Education, 39(5), pp.650-669.
Arabzad, S.M., Ghorbani, M., Razmi, J. and Shirouyehzad, H., 2015. Employing fuzzy TOPSIS
and SWOT for supplier selection and order allocation problem. The International Journal of
Advanced Manufacturing Technology, 76(5-8), pp.803-818.
Bell, G.G. and Rochford, L., 2016. Rediscovering SWOT’s integrative nature: A new
understanding of an old framework. The International Journal of Management Education, 14(3),
pp.310-326.
Borland, H., Ambrosini, V., Lindgreen, A. and Vanhamme, J., 2016. Building theory at the
intersection of ecological sustainability and strategic management. Journal of Business
Ethics, 135(2), pp.293-307.
Gans, J. and Ryall, M.D., 2017. Value capture theory: A strategic management review. Strategic
Management Journal, 38(1), pp.17-41.
Goncharuk, A.G., 2016. Banking sector challenges in research. Journal of Applied Management
and Investments, 5(1), pp.34-39.
Jensen, A.B., 2016. Business Modelling as aWay Forward for Strategic Management Processes-
A Case Study of SME’s. Journal of Multi Business Model Innovation and Technology, 4(1),
pp.1-34.
Kangas, J., Kajanus, M., Leskinen, P. and Kurttila, M., 2016. Incorporating MCDS and voting
into SWOT: Basic idea and experiences. Serbian Journal of Management, 11(1), pp.1-13.
Lechner, C. and Gudmundsson, S.V., 2014. Entrepreneurial orientation, firm strategy and small
firm performance. International Small Business Journal, 32(1), pp.36-60.
Shah, S.T.H., Jamil, R.A., Shah, T.A. and Kazmi, A., 2015. Critical Exploration of Prescriptive
and Emergent approaches to Strategic management: A review paper. International Journal of
Information, Business and Management, 7(3), p.91.
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7COMPREHENSIVE STRATEGY
Wolf, C. and Floyd, S.W., 2017. Strategic planning research: Toward a theory-driven
agenda. Journal of Management, 43(6), pp.1754-1788.
Zhao, X., Pan, W. and Chen, L., 2018. Disentangling the relationships between business model
innovation for low or zero carbon buildings and its influencing factors using structural equation
modelling. Journal of Cleaner Production.
Wolf, C. and Floyd, S.W., 2017. Strategic planning research: Toward a theory-driven
agenda. Journal of Management, 43(6), pp.1754-1788.
Zhao, X., Pan, W. and Chen, L., 2018. Disentangling the relationships between business model
innovation for low or zero carbon buildings and its influencing factors using structural equation
modelling. Journal of Cleaner Production.
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