Development Tools for Competitive Strategy: PESTLE, Five Force Analysis, and SWOT Analysis

This article discusses the importance of development tools such as PESTLE, Five Force Analysis, and SWOT Analysis in achieving competitive advantage. It explains how these tools help in conducting effective market analysis and making informed decisions. The article also provides examples of how these tools are used by companies to achieve success.

Running head: Competitive strategy
Competitive Strategy

Competitive strategy
Development tools play a great role in conducting the activities of the company. To
conduct the activities it is seen that proper management and analysis of the market should be
there so that growth can be achieved in the company. To achieve success it is seen that company
should focus on the tools like Porter five force models, SWOT analysis, and PESTLE. If these
are taken into consideration in an effective manner then it can be possible to achieve competitive
advantage in a proper manner. These tools of the management give support to the company so
that effective strategies can be considered. So, the paper would discuss about the development
tools.
PESTLE ANALYSIS
It is one of the best tools which are used by the company so that goals and objectives can
be accomplished effectively. It is taken into consideration by the marketers so that macro
environmental analysis can be conducted in a proper manner. It affects the activities of the
company and also profits of the company are based on the activities conducted by the employees.
The external factors can be analyzed and also it is seen that evaluation is made so that the
company can conduct the activities in a direction.
It is seen that managers can analyze the risks and can give directions so that in right
direction activities can be conducted. The information is gathered through this analysis so that
employees can conduct the activities in a right direction. The top management or the senior
managers of the company consider this technique so that the activities of the company can be
managed in a proper manner (Reinboth & Duda, 2016).
In this analysis, there are six types of factors like political, economic, Technological,
legal, social and environmental. It also assists to evaluate the business in context to the economic
and social growth of the organization. It is seen in the political factor government policy,
political stability and also foreign trade policy is taken into consideration. Economic factor gives
direct impact on how the company conducts the business and how they achieve profits (Pervan,
Curak & Pavic Kramaric, 2017). In this, the factors are economic growth, exchange rates, and
interest rates. These factors focus on the demand of the management in the economy and also the
government takes into consideration interest rate control and taxation policy. In social factors,
the focus is given the belief and attitudes of the population (Rothaermel, 2015). It consists of
1

Competitive strategy
growth of the population, age distribution and career attitudes. These factors understand the
customers and the how marketers react to some particular situation.
In technological factor, it is seen that focus is given to the latest technologies and also
how this affect the way the products are marketed. In environmental factors, the focus is given
on sustainability. In legal factors, it includes health and safety and equal opportunities. The
company also focuses on legal policies so that growth can be achieved (Jarzabkowski & Kaplan,
2015).
For example: it is seen that Hershey's is one of the largest company in the food brand that
emphasis on the policies and procedures of the organization. The rules and regulations of the
company are considered in the legal factor. In economic factor, the company focuses on the
spending pattern and also on the innovation so that growth can be achieved. The company
focuses on a technological factor by considering the latest technology so that production can take
place in a proper manner.
So, this tool is the best tool that helps to evaluate the condition of the market. Through
this tool competitive advantage can also be achieved. It helps to analyze the demand of the
customers in the market (Oberholzer-Gee & Yao, 2017).
Five force analysis
This tool of management assists in analyzing the competition prevailing in the market. In
this tool, there are five factors on which focus is given and the factors are a threat of entrants,
power of suppliers, a power of buyers and rivalry against the competitors. This tool emphasizes
the overall performance of the company. If this tool is not considered then it can be difficult to
conduct the activities of the organization smoothly (Hjaila et al., 2017). It is analyzed that five
force analyses help to analyze the environment of the market and according to that only the
products are introduced in the market. The company considers the changes by focusing on the
five force analysis so that it can be implemented according to the need of the customers. It is
seen that when new strategies are implemented it will give advantage and help to achieve
competitive advantage for achieving growth in a proper way (Dälken, 2014).
2

Competitive strategy
For example: Tesco is one of the largest retail outlets globally. It is analyzed that threat of
substitutes is high as consumers can buy any purchase or can substitute the products easily. If the
focus is competition level it is seen that it is also high as there are many firms who are offering
same products in the market. If the emphasis is given to the suppliers it is seen that it is low as
there are various stores who can provide products to the customers. Power of the buyer is also
one of the factors and it is seen that it should be considered so that products can be given to the
customers and can enhance the overall profitability. The threat of new entrants it is seen that it is
high as there are many small businesses who are entering the market. It can be a threat to the
company as the products are supplied to the customers at a low price. So, a threat is high if the
focus is given on the new entry of the firm.
Five force factors are analyzed by the sales department and also it is analyzed in such a
manner that goals and objectives can be achieved in a smooth manner. This factor also helps to
analyze the level of competition in the market so that direction can be given to the customers by
focusing on the activities of the market. This factor helps to accomplish the overall goals and
objectives of the company.
SWOT ANALYSIS
This tool focuses on the overall strength, weakness, opportunities, and threats. SWOT
analysis is taken into consideration at the time of starting the business or as a major part of
strategic planning exercise. It is seen that this framework is known as a strong support for
making decisions as it helps to analyze the opportunities so that success can be achieved.
Strength focuses on internal attributes and also gives assistance to the results (Salavou, 2015). It
is seen that weakness focuses on the resources that work against the successful result.
Opportunities are external factors that help to use the advantage prevailing in the market. Threats
are the factors which are external and also it can impact to reduce the overall success of the
company (Murphy, 2016).
It is considered so that organization can analyze the actual performance and also the level
of productivity of the company. There are various factors that can help to analyze the current
situation of the company if the focus is given to this tool. It helps to enhance the strength and
opportunities prevailing in the market and focuses on minimizing the threats so that goals can be
3

Competitive strategy
accomplished in a proper way (Liu & Atuahene-Gima, 2018). If a company knows the strength
then it can be easy to achieve success in the market and if weakness is analyzed on the earlier
stage by the company then steps of improvement can be taken so that company can achieve
success in an effective manner.
For example: it is seen flip kart strength is the brand name, the weakness is related to
ineffective proper services offered by the company. It is also seen that the focuses on reducing
the threats which are a large number of competitors in the market. So, they reduce it by giving
offers to the customers so that goals can be accomplished effectively. Also, the weakness of the
company is that the activities are conducted on the online platform there is no retail outlet to sell
the products (Steffen, 2017).
SWOT Analysis can be considered at the time of focusing on the insights into the current
and future position in the market. It is seen that when the factors of this tool are identified then it
can help the company to make the decisions in a proper manner. It can also aim to assist an
organization to match with the resources so that activities can be conducted smoothly in the
competitive advantage. It is very important to conduct the activities in a smooth manner in the
organization so this tool is considered. The analysis can assist the process of decision making so
that business can achieve its target in a proper manner (Hanson et al., 2004). This tool captures a
particular point of time and also helps to analyze the internal factor of the business in a proper
manner.
4

Competitive strategy
References
Dälken, F., 2014. Are porter’s five competitive forces still applicable? a critical examination
concerning the relevance for today’s business (Bachelor's thesis, University of Twente).
Hanson, D.J., Dowling, P.J., Hitt, M.A., Ireland, R.D. and Hoskinson, R.E., 2004. Strategic
management: Competitiveness and globalisation.6ed. Melbourne: Nelson Thomson Learning.
Hjaila, K., Puigjaner, L., Laínez, J.M. and Espuña, A., 2017. Integrated game-theory modelling
for multi enterprise-wide coordination and collaboration under uncertain competitive
environment. Computers & Chemical Engineering, 98, pp.209-235.
Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools‐in‐use: A framework for understanding
“technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.
Liu, W. and Atuahene-Gima, K., 2018. Enhancing product innovation performance in a
dysfunctional competitive environment: The roles of competitive strategies and market-based
assets. Industrial Marketing Management.
5

Competitive strategy
Murphy, C., 2016. Competitive intelligence: Gathering, analysing and putting it to work.
Routledge.
Oberholzer-Gee, F. and Yao, D.A., 2017. Integrated Strategy: Residual Market Imperfections as
the Foundation of Sustainable Competitive Advantage. Harvard Business School Working Paper.
Pervan, M., Curak, M. and Pavic Kramaric, T., 2017. The Influence of Industry Characteristics
and Dynamic Capabilities on Firms’ Profitability. International Journal of Financial
Studies, 6(1), p.4.
Reinboth, M. and Duda, J.L., 2016. Effects of competitive environment and outcome on
achievement behaviors and well-being while engaged in a physical task. Sport, Exercise, and
Performance Psychology, 5(4), p.324.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Salavou, H.E., 2015. Competitive strategies and their shift to the future. European Business
Review, 27(1), pp.80-99.
Steffen, B., 2017. The physics of software tools: SWOT analysis and vision. International
Journal on Software Tools for Technology Transfer, 19(1), pp.1-7.
6