Analyzing Strategic Tools for Business Environment

The essay throws light on analyzing the different kinds of strategic tools which play major role in increasing awareness of the business environment, strategic issues, threats along with opportunities which assists in reducing the different risks which are involved in managing essential decisions and providing proper framework for assessing the long-term success of the business.

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Introduction
The essay throws light on analyzing the different kinds of strategic tools which play
major role in increasing awareness of the business environment, strategic issues, threats along
with opportunities which assists in reducing the different risks which are involved in
managing essential decisions and providing proper framework for assessing the long-term
success of the business. The different tools which will be used includes SWOT, PESTEL,
Ansoff Matrix and Porter’s Five Forces Model analysis that will be helpful in improving
scenario of the organization.
SWOT Analysis
It is the analytical tool which is utilized in determining characteristics which includes
the following:
Strengths- It helps in describing the different aspects wherein organization excels and
it makes the company different from other competitors such as strong brand image, unique
kind of technology along with strong balance sheet.
Weaknesses- It is the aspect which stops companies from performing to their
optimum level and there are different areas wherein business needs to improve to remain
competitive such as weak brand image and inadequate supply chain activities (Gürel and Tat
2017).
Opportunities- It refers to the different external factors which are favorable and
provides competitive advantage which will be increasing sales of company.
Threats- It refers to the factors which have potential to harm companies such as
increasing competition and rising costs of the different materials.

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For instance- SWOT Analysis of Woolworths
Strengths
Strong Brand image and effective operations
It is the pioneer brand amongst oldest companies
Weaknesses
Limited global presence
Growing presence of online competitors restricted growth
Opportunities
Promoting brand through promotions and sponsorships
Opening new stores in various geographic locations (Woolworths.com.au 2019)
Threats
Huge competition from international players
Rising cost of raw materials will impact growth and profit margins
PESTEL Analysis
Political Factors- It is inclusive of factors which determine extent to which
government that influence the industry inclusive of political stability or taxation policies
(Hernández-Perlines, Moreno-García and Yañez-Araque 2016).
Economic Factors- The respective factors impact the entire economy and
performance that can impact companies and profitability inclusive of interest rates and rates
of foreign exchange.

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Social Factors- It is inclusive of factors which focuses on social environment by
identifying emerging trends. It helps marketers in understanding needs and wants of
customers such as cultural trends and changes in lifestyles (Moutinho and Phillips 2018).
Technological Factors- It is inclusive of rate of technological advancements and
innovations which affects industry. Factors are inclusive of automation along with research
and development in the process of manufacturing (Moutinho and Phillips 2018).
Legal Factors- It is inclusive of internal and external aspects wherein the different
laws can affect business environment in a certain country such as consumer protection laws.
Environmental Factors- The different factors include ecological aspects wherein
with rise of CSR, element is becoming effective (Moutinho and Phillips 2018).
For instance- PESTEL Analysis of Woolworths
Political
Political pressure against duopolistic type of retail market
Economic
Easy regulations which is positive aspect for Woolworths to expand their operations
(Woolworths.com.au 2019)
Social
Poor relationships with various suppliers and it affect business
Technological

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Proper implementation of SAP technology to improve the effectiveness
(Woolworths.com.au 2019)
Legal
There are legal issues and battles and strict mandatory legal codes
Environmental
Investments in carbon initiatives that can affect growth of Woolworths
Porter’s Five Forces Model
Industry Rivalry- The major driver is capability and number of competitors present in
the market. There are various competitors which offers undifferentiated products and services
which will reduce attractiveness of the market.
Threat of New Entrants- It helps in determining how easy it is to enter the particular
industry and when the industry is profitable and there are few barriers, it will strengthen
position of new entrants and they can enter in the market (Panwar et al., 2016).
Threat of Substitutes- It analyzes the number of close substitutes which are present in
the market as it increases the likelihood of the customers switching to various alternatives.
Bargaining Power of Suppliers- It is assessment in analyzing how easily the
suppliers will be driving the prices and it is driven through analyzing number of suppliers and
switching cost from one supplier to other (Phadermrod, Crowder and Will 2019).

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Bargaining Power of Buyers- It is assessment in which it analyzes how easy it is for
buyers to drive the different prices down. It is driven by analyzing cost to buyer of switching
from one supplier to other (Prajogo 2016).
For instance- Porter’s Five Forces of Woolworths
Threat of new entrants- It is low in nature and is set to remain unchanged for
Woolworths as the potential entrants in the market cannot match with economies of scale of
the company.
Threat of substitutes- Risk is high as there are different indirect competitors present
in the market
Bargaining power of customers- It is low; however, it will be increasing in the future
as there will be other substitutes such as Costco that can affect the growth of Woolworths
Bargaining power of suppliers- It is low as Woolworths and Coles handles more than
80% of the market share (Woolworths.com.au 2019)
Competitive rivalry- It is high as there are different small companies which are selling
similar products like Woolworths and it affects their brand image
Ansoff Matrix
It is defined as the strategic planning tool which helps in providing a framework
which will be beneficial for the different executives in the organization to devise the different
strategies which will be appropriate for the future growth of the company (Rothaermel 2015).
Ansoff presented the respective matrix which mainly focused on present as well as potential
products and customers. The different aspects in Ansoff Matrix are as follows:

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Market Penetration- In which firm seeks to achieve the growth prospects within
existing products in the current market segments which will be increasing the market share
Market Development- In which the company seeks the overall growth through
targeting the existing products to new market segments (Salavou 2015)
Product Development- In which the company develops the different new products
and the main target will be the existing market segments
Diversification- In which the firm grows through diversification in new business
through proper development of the new products for the completely new markets (Velásquez
and Meunier 2017)
Ansoff Matrix of Woolworths
Market Penetration- It includes promotion of new products and increase their market
share
Market Development- Woolworths has been able to follow several policies related to
pricing to follow the new marketing segments and attract them
Diversification- It is the other aspect in which vertical integration has been followed
by Woolworths for the sales stage storage programme
Product Development- Proper development of the new along with innovative
techniques that can replace the existing markets appropriately
Conclusion
Therefore, it can be concluded that these are the different strategic tools which plays a
beneficial role in improving the position of the company in the market and gain competitive
advantage through identifying the opportunities and improving threats.

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References
Gürel, E. and Tat, M., 2017. SWOT ANALYSIS: A THEORETICAL REVIEW. Journal of
International Social Research, 10(51).
Hernández-Perlines, F., Moreno-García, J. and Yañez-Araque, B., 2016. The mediating role
of competitive strategy in international entrepreneurial orientation. Journal of Business
Research, 69(11), pp.5383-5389.
Moutinho, L. and Phillips, P., 2018. Strategic analysis. In Contemporary Issues in Strategic
Management (pp. 46-79). Routledge.
Panwar, R., Nybakk, E., Hansen, E. and Pinkse, J., 2016. The effect of small firms'
competitive strategies on their community and environmental engagement. Journal of
Cleaner Production, 129, pp.578-585.
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis
based SWOT analysis. International Journal of Information Management, 44, pp.194-203.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment
in delivering business performance. International Journal of Production Economics, 171,
pp.241-249.
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.
Velásquez, A. and Meunier, L., 2017. COMPARATIVE MARKETING ANALYSIS OF
THE UK AND GERMANY FOR GLOBAL SUSTAIN.

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Woolworths.com.au 2019 Woolworths Supermarket - Buy Groceries Online (online)
Retrieved from https://www.woolworths.com.au/ [Accessed on 22th April 2019]