Essay on Strategy Development Tools

COMPETITIVE
STRATEGY

Essay on “Strategy development tools”
In this essay, the focus will be given on main strategy development tools that are
important to be considered in the present era. The three tools that will be discussed in
this paper are SWOT Analysis, Five force analysis and Resource based view. It is
examined that the strategy development tools assist the companies in maintaining the
overall effectiveness of the business functions. The three tools that will be discussed in
this report focuses on the internal and external environment of the company and helps
to find out weakness and strength in relation to the overall activities managed on global
platform. In this report, the current examples will also be discussed in relation to each
strategy development tools.
1.) Porter five force analysis
Porter five force analysis is considered as one of the popular strategy tools which is
considered by the companies in the present competitive business world. It is noticed
that it is also called as business analysis model that assist in elaborating about the
sustainability in relation to the profitability ratio. The five forces are majorly considered
to evaluate the overall competition intensity, profitability and also the attractiveness of
the market (Van Alstyne, Parker and Choudary, 2016). The five forces are also known
as a framework that assist in accessing and examining the competitive strength and
position of the organization in relation to the competitors present in the market. This
model was introduced by Michael Porter in 1980 and from that time majority of
companies considered this tool as it assists in attaining the set targets and goals. There
are five forces in relation to this tool such as Threat of substitutes, Suppliers power,
Buyers power, potential of new entrants and competitive rivalry (Fitzpatrick, Nguyen and
Cayan, 2015).
The force related with threat of substitutes highlights the new entrants in the sector that
bring new capacity and desire to attain large market share. If the barriers of entry are
high the there will be smaller threat of existing competitors. The barrier to entry is linked
with the factors such as policies of the government, capital requirement and also high
customer loyalty. The next force is linked with bargaining power of supplier in which the
focus is given on the analysis of how much power and control a supplier of the company

has to enhance its prices or to reduce the overall quality of the purchased products. To
determine the power of the suppliers, there are two factors which are important such as
concentration of the suppliers and availability of substitute suppliers. Third is bargaining
power of buyers which also elaborates the market of the outputs. In this force, the
emphasis is given on the capacity of the customers to put the organization under
pressure. Fourth is threat of substitute products in which the focus is given on the
alternatives that are creating threat for the company. When different products satisfy the
similar needs of the people, then it creates threat for the company in relation to the
substitute products. The last one is Rivalry among the competitors which are present in
the market. In this it is noticed that evaluation is done of how intense is the level of
competition in the market and it is determined by the overall competitors which are
present and also who are capable of maintaining the large market share (E. Dobbs,
2014).
(Source: Business to you, 2019).
Example of EASYJET airline company Threat of new entrants