Importance of Strategic Tools for Organizations: PESTEL, SWOT, Ansoff, and Five Forces Analysis

This essay explores the significance of strategic tools like PESTEL, SWOT, Ansoff, and Five Forces analysis for organizations. It specifically examines how these tools can be applied to Aldi, a company, to gain a competitive advantage in the market. The essay discusses the importance of assessing the external environment through PESTEL analysis, evaluating internal strengths and weaknesses through SWOT analysis, understanding market competitiveness through Five Forces analysis, and exploring growth opportunities through Ansoff matrix.

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
PESTEL analysis....................................................................................................................2
SWOT analysis.......................................................................................................................2
Five Forces analysis...............................................................................................................3
Ansoff matrix.........................................................................................................................4
Conclusion..................................................................................................................................4
Reference List............................................................................................................................5

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Introduction
The main purpose of this essay is to understand the importance of the strategic tools
taken up by the organizations so that it can earn an advantage in the market. It helps the
companies in assessing the environment internally and externally so that the products and
services can add value to its customers. The essay will focus on the importance of PESTEL,
SWOT, Ansoff and Porter’s Five Forces analysis with respect to Aldi as a company so that it
can help in understanding it in a better manner.
Discussion
PESTEL analysis
This strategy helps in understanding the external environment in which the company
is operating. It is an abbreviation for Political, Economic, Social, Technological,
Environmental and Legal. The political factors help in understanding the policies and
procedures that are present in the country in which the company is operating its business
(Bocken 2017). The economic conditions are also important as it helps in understanding the
financial position of the market in the world and the opportunities present to Aldi that will
help them in growing globally. The social factors help in understanding the society in which
the products and services will be provided so that Aldi can understand the needs and demands
of the customers (Mayo 2016).
The technological factors will allow the company in adopting the latest technologies
that are present in the place so that the goods and services can be manufactured and delivered
efficiently to the customers and maintain a lower operating cost. The legal factors need to be
assessed by Aldi so that it can help in understanding the rules and regulations that they need
to follow so that the business can continue in an ethical manner (Tanaka 2013). The
environmental factors will help the company in understanding the effects of pollution that can
hamper the surrounding environment. Aldi needs to take up certain Corporate Social
Responsibility (CSR) activities that will allow them in maintaining the trust among the
customers with respect to protecting the environment and making the business sustainable in
nature (Bocken 2017).
SWOT analysis
This strategical tool allows the company to measure its internal strengths so that it can
be capable to compete in the market within the rival companies. It stands for strengths,
weakness, opportunities and threats that Aldi needs to assess so that it can help in gaining a

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competitive advantage. The strengths for the company will allow them in utilizing the
resources that are present to them in an optimum manner so that it can enjoy a higher rate of
profit (Suh 2014). This will allow the company in enjoying a better position in the market
with respect to finance as well. The weakness of Aldi needs to be evaluated so that the
management can overcome it in a proper manner and turn it in to their strengths that will
benefit the company in a positive manner. This will allow the company in competing with the
rival companies that are present in the market (Ebonzo and Liu 2013).
The opportunities that are present in the company needs to be evaluated so that it can
help in increasing the core competencies. This will result in increasing its efficiency in the
production line so that the products and services can be of premium quality. The evaluation
of the opportunities will also help in tackling the obstacles that are present so that the rate of
profits can be increased to a great extent. The threats that are present in Aldi also needs to be
eradicated so that it can help in increasing the uniqueness of the products and services, which
will attract more number of customers (Ming et al. 2014).
Five Forces analysis
This strategic tool will allow the company in evaluating the strengths and
competitiveness that it enjoys in the market where it is operating. The organizational strength
has to be evaluated so that it can maintain its position in the market by increasing its number
of sales in the market. The power of the suppliers will help Aldi in understanding the impact
that the suppliers can create in the market, which can be avoided by maintaining a healthy
relationship with them (Dobbs 2014). The suppliers also help in regulating the cost of the raw
materials in the market, which can be obtained cheaply by the company. The power of the
buyer is also important, which will help the company in gaining all the information with
respect to the prices of the products. This will allow the company in keeping the prices
competitive so that it can gain an advantage in the market. Aldi will also help in gaining a
better level of knowledge with respect to the prices that are customers are willing to pay for
the particular products (Burns and Dewhurst 2016).
The rivalry among the competitors will help Aldi in understanding the competitors
such as Lidl and Woolworths that are operating in the same market. These companies provide
the products and services at a competitive price that allows in attracting more number of
customers. The rival threats may also reduce the level of attractiveness of the products that
are being offered by Aldi. The threat of substitution will help Aldi in understanding the

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demands of the customers so that it can create unique products, which will help in attracting
more number of customers. The threat from entry of new companies also needs to be assessed
by the company so that it can decrease it by taking up better strategies that will help in selling
more of the products to the customers (Dobbs 2014).
Ansoff matrix
This strategic tool will help Aldi in assessing the risks that may be present to the
business so that the growth does not get hindered. It can take necessary steps in mitigating the
risks so that the profit levels can be achieved in an efficient manner. The market development
will help Aldi in targeting the new markets so that more number of customers can be
attracted. It will also be able to use the different channel of sales so that the products can be
available to the customers readily (Hussain et al. 2013). The market segmentation will also
help in differentiating the population present within the society so that the products and
services can be provided accordingly. The diversification part of the matrix will help the
company in achieving its economy of scale by allowing them to sell the different products to
different customers. Diversification will also provide an advantage to the company to expand
its business (Rudnicki and Vagner 2014).
The market penetration quadrant will allow Aldi in developing the marketing strategy
so that more customers can be encouraged in choosing the products and provide them with
loyalty scheme so that a healthy relationship can be built up between them. Aldi can also
increase its activities related to sales force so that it can result in increasing the products in
the market. The product development quadrant will allow the company in repackaging the
existing products so that it can appeal the the customers in a new manner. This will also help
in improving the services towards the customers as well (Hussain et al. 2013).
Conclusion
Therefore it can be conclude that the use of the strategical tools will help the company
in analysing the internal as well as the external environment. It will also help Aldi in enjoying
a competitive advantage in the market over the rival companies that are present. The
company will also be able to increase its core competencies and function in a proper manner
within the operating market.

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Reference List
Bocken, N., 2017. Business-led sustainable consumption initiatives: impacts and lessons
learned. Journal of Management Development, 36(1), pp.81-96.
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
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.
Ebonzo, A.D.M. and Liu, X., 2013. The use of axiomatic fuzzy set theory in AHP and
TOPSIS methodology to determine strategies priorities by SWOT analysis. Quality &
Quantity, 47(5), pp.2671-2685.
Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment,
and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2),
pp.196-206.
Mayo, A., 2016. Human resources or human capital?: Managing people as assets. Routledge.
Ming, Z., Shaojie, O., Yingjie, Z. and Hui, S., 2014. CCS technology development in China:
Status, problems and countermeasures—Based on SWOT analysis. Renewable and
Sustainable Energy Reviews, 39, pp.604-616.
Rudnicki, W. and Vagner, I., 2014. Methods of strategic analysis and proposal method of
measuring productivity of a company. Zeszyty Naukowe Małopolskiej Wyższej Szkoły
Ekonomicznej w Tarnowie, (2 (25)), pp.175-184.
Suh, J., 2014. Theory and reality of integrated rice–duck farming in Asian developing
countries: A systematic review and SWOT analysis. Agricultural Systems, 125, pp.74-81.
Tanaka, H., 2013. A viable system model reinforced by meta program management.
Procedia-Social and Behavioral Sciences, 74, pp.377-387.