Strategic Tools for Competitive Analysis: SWOT, PESTEL, Porter's Five Forces, and Generic Strategies

This essay discusses the importance of strategic tools in competitive analysis for businesses. It covers the use of SWOT analysis, PESTEL analysis, Michael Porter's Five Forces, and Generic Strategies. The essay provides examples of how these tools can be used in different industries to gain a competitive advantage.

Running head: COMPETITIVE STRATEGY
COMPETITIVE STRATEGY
Name of the Student
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Author Note

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Introduction
Strategic Management can be considered to be an integral part of the organization and
with respect to this it becomes highly crucial for the business to ensure that it is successfully able
to engage in the right use of the strategic tools which will go a long way in assisting the different
firms to ensure a successful analysis of the external environment (Bull et al. 2016). The essay
will highlight a few strategic tools and their use. These tools will be the tools like SWOT
Analysis, PESTLE Analysis, Michael Porters Five forces and Generic strategies
Discussion
SWOT Analysis
According to Robson (2015), the Swot analysis can be described as a useful tool which
can be used by the different business to understand the factors which exist in their internal
environment and may have a strong influence on the overall working of the company at large.
The SWOT can be stated to be acronym for Strengths, weaknesses, Opportunities and Threats.
The Strengths of the company help in understanding the internal capabilities of the company
which they can use to take advantage of the different factors which exist in the external
environment of the business. The weaknesses of the company can be in the same way considered
to be the internal incapability’s which tend to tamper with the success of the company in the long
run. The opportunities as well as the threats can be stated to be the factors which exist outside the
realm of the firm but may be affecting the success of the firm and present a way to either make
the company grow or make the company perform in a poor manner (Meyer, Neck and Meeks
2017). Hence, the SWOT analysis can be stated to be a tool which provides an overall analysis to
the firm from the internal perspective as well as the external perspective. This can be then used
by the firm to use the strengths to access the opportunities and limit the threats and in the same
way convert the weaknesses into the opportunities in the long run.
For instance, if the example of the automobile industry is taken, the SWOT analysis
would go a long way in assisting the different businesses to gain success in the long run as it will
highlight their strengths as well as the weaknesses which can be later aligned with the different
opportunities as well as the threats. For an automobile industry company like Ford the strengths
of the business will be that it has a strong market presence and that it engages in considerable

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marketing strategies, whereas the weaknesses will be that the business does not have a
considerable customer service. The opportunities which lie in the way of Ford can be that it can
engage in a new product line whereas the threats may be that the firm faces considerable
problems with respect to the competition as present (Rothaermel 2015). Hence, using this
analysis, Ford will be able to understand that the expansion of the product line will be a good
strategy for the firm as it has a considerable brand presence.
PESTEL Analysis
According to Wheelen et al. (2017),The PESTEL Analysis is another comprehensive tool
which can be used by the different businesses in order to gain a comprehensive view of the
external environment. The business environment is quite dynamic in nature and thereby
comprises of a large number of factors which tend to have an impact on the overall functioning
of the company at large. In this aspect, it can be mentioned that the factors can be clubbed under
the heads Political, Economic, Social, Technological, and Legal as well as Environmental
factors. These factors have the capability to impact the overall functioning of the business
enterprise and tend to have a strong influence on the overall working of the firm at large.
Another factor which needs to be considered by the different businesses is that as these
businesses lie outside the realm of the firm, the business cannot have a strong control over these
factors and for this reason, the PESTEL Analysis has a great use for all the businesses as they
tend to highlight the different factors which lie waiting for the business at large and through this
analysis, hey will be able to understand the different strategies which they will be required to
form in case they want the business to be successful in the long run.
For instance, if the example of the Tourism industry is taken then the PESTEL Analysis
has a key role to play. The Tourism industry comprises various Airline companies and others
who can make considerable use of the tool of PESTEL (Hill 2017). The political factors affecting
the firm can be the governmental policies with respect to the flying regulations and the terrorism
growth, the economic factors can be the rising price of the fuels, and the social factors can be
defined as the preference of the buyers and other related parties who help the business in
deciding upon the strategies to firm. The technologies in this case can be the advanced Artificial

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intelligence being used. In such a case, a business can learn how to align the factors as per their
needs.
Michel Porters Five forces
Each business functions within a specific industry and there are various competitive
forces which are present in the industry and tend to have an overall impact on the operations of
the firm at large. For this reason, it becomes crucial for any business to ensure that it is
successfully able to engage in an effective competitive analysis using the Michael Porters Five
forces tool which will then go a long way in ensuring that the company is successfully able to
assess the competitive environment and be able to analyze the different factors which are present
in the industry (Hill, Jones and Schilling 2014). Through the five forces analysis, an examination
of the presence of substitutes, bargaining power of the suppliers and buyers, analysis of the
entrant threat and the competitive rivalry can be examined at large. In this manner, the business
will be successfully able to form the different strategies easily which shall go a long way in
ensuring that the business will be able to manage its operations at large.
For instance, the retail industry can use these five forces and measure their level of
intensity in order to understand whether the brand will be successful in the long run or not. The
retail industry can be stated to be an industry with high levels of substitute and high threat of new
entrants. In addition to this, the power of suppliers is low and that of the buyers can be
considered to be quite high. Lastly, the intensity of competition as present in the industry can
also be considered to be very high which then has an impact on their strategies.
Generic strategies
According to Spry and Lukas (2016), it needs to be noted that a firm`s position in the
industry is a strong determinant of whether the firm is performing well or not. Hence, this
assurance that the firm is engaging in successful profit making ventures, ensures that the
business will be able to earn a long term competitive advantage. Hence, the businesses should
make use of the strategic tool of Generic strategies which will help the firm in deciding upon the
different advantages which it needs to cater to in the long run. This differentiation strategy to be
adopted can either be the cost leadership strategy or the differentiation strategy (Ginter, Duncan
and Swayne 2018). These two generic ideas help a business to form three different strategies

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which can be adopted by the organizations at large and seek to achieve an above average
performance in the long run of the firm. The strategies which the business can adopt using the
Generic strategies are Cost leadership, differentiation and the focus strategy. The focus strategy
can be further subdivided into the cost focus and the differentiation focus. Once the company is
successfully able to understand the kind of strategy it wants to adopt for itself it will then be able
to understand which markets it should actually cater to and which market should the firm stay
away from (Doz 2017). For example, in case of the retail industry, the companies like Walmart,
and Tesco tend to follow the Cost leadership strategy which then helps them to attain a large
target market. On the other hand, the firms like Mc Donald’s and FedEx generally tend to follow
the differentiation strategy which helps them to provide specialized services and last, the Pepsi
co follows a focus strategy.
Conclusion
Hence, from the given analysis it can be understood that the strategy of the firm goes a
long way in helping the firm to attain a long term success and with respect to this, it is important
for a firm to understand that it is successfully able to make use of the different strategic tools
available so as to ensure that it is able to compete in the business environment and gain strategic
success.

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