Strategy Development Models

This essay examines various strategy development models, including PESTLE analysis, Porter's Five Forces model, Resource Based View, and SWOT analysis. It provides practical business examples to illustrate the application of these models in strategic planning and decision-making. The essay examines the strengths and weaknesses of each model and their impact on achieving sustainable growth and competitive advantage.

Essay

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
This study will highlight, strategy development models in relation to the practical
business examples. This study will highlight, PESTLE Analysis, Porter's five force
model, Resource based view and SWOT analysis.
MAIN BODY
PESTLE Analysis
PESTLE Analysis is a fundamental framework which helps in identifying the
macro forces which influence the operations of the business. It helps in strategics
business planning which leads to effective decision making that helps company in
sustainable growth and development of the organization.
Political factor: Political factors relates to the degree to which government institution or
body will intervene by implying various government policies and regulations which
influence the working of the organization (Fozer and et.al., 2017). Political factors
include government policy, corruption, tax, foreign trade, political stability or instability,
trade barrier, terrorism, inter- country relationship, Bureaucracy, fiscal policy, etc.
For example: Starbucks has to comply with the laws, policies and regulation of the
counties in which it operates for smooth functioning of the business.
Economic factor: Economic factors like interest rates, inflation rates, currency exchange
rates, disposable income of consumers, unemployment rate, inflation, import/ export,
international trade, economic downturn, etc. have significant impact on the operation of
the business.
For example: Starbucks has to deal with rising operational cost and inflation affect the
operations of business which leads to lower profitability for the business.
Social factor: Socio-cultural factors like demographics, consumer buying behaviour,
changing attitude, work ethic, cultural differences, values, beliefs, lifestyle trends, etc.
Social factors helps in identifying the needs and wants of customer for higher
sustainable growth and development of business(Scanning the Environment: PESTEL
Analysis, 2016).

For example: People are becoming more health conscious worldwide and aims to move
towards better lifestyle. Starbucks must focus on developing products by focusing on
the needs and wants of customers.
Technological factor: Technology is changing at a faster pace which gives company the
ability to innovate their present performance by adapting new and advanced technology
into the organization which helps in developing new ways of producing goods and
services, distributing and communicating with the target market. Technological factors
like new emerging technology, research and innovation, competitor technology,
intellectual property issues, technology legislation, etc.
For example: Starbucks focus on implementing new technology into the organization for
higher growth of the business.
Environmental factor: Environmental factors relates to environmental aspects and
ecological factors. Environmental factors includes environmental laws and regulations,
sustainability, ecological regulations, weather, climate, carbon emission, etc.
For example: Starbucks activities influence the environment which leads adversely
influence the operations of business. They must focus on green and ethical
environmental practices (McDONALD, 2016).
Legal factor: Legal factors includes various legislations, laws and regulations which
affect the operations of the business. It includes health and safety laws, employment
law, consumer protection law, competitive regulation, industry specific regulation, tax
regulation, etc.
For example: Starbucks must ensure that it must comply with al legal laws within the
countries in which it operates and must not violate any laws. Starbucks must effectively
maintain all standards.

Porter's five force model
This model strategically analyse the five forces which helps in shaping the
business and also helps in effectively determining the strengths and weakness of the
business.
Rivalry competitors: This force refers to the number of competitors that are present in
the market. Firms tend to strive for competitive advantage in the market and higher
market share.
For example: Starbucks face moderate to strong competition in the market with Costa
coffee, McDonald's, Dunkin Donuts, Wendy's, subway and Burger king. They aim to
position their market by providing new products and services to customers.
Threat of new entrants: This forces states that new competitors can enter into the
market who are offering same range of products at a competitive price. This pose a
major threat on the operations of business and leads to lower operational efficiency.
For example: Threat of new entrant is moderate for Starbucks which helps them in
maintaining the competitive position in the market.
Threat of substitute products: This force helps in determining the substitute products
offered by its competitors. Threat of substitute products is determined by switching
cost, buyers inclination to substitute and price trade off substitute which leads to lower
profits and revenue for the business (Carraher, 2018).
For example: Threat of substitute products is strong for Starbucks as it has high number
of substitutes available in the market and also low switching cost impact the operations
of the business.
Bargaining power of buyers: This force states that customers have significant power to
drive the prices down of the products. This force is influenced by bargaining leverage,
product differentiation, brand identity, price sensitivity, buyer volume, etc.
For example: The bargaining power of buyers are moderate for Starbucks as the
customers have low switching cost and large number of substitutes are available in the
market.

Bargaining power of suppliers: A strong supply chain or distribution network limits the
bargaining power of suppliers. This leads to lower operational cost and higher
profitability.
For example: The bargaining power of suppliers is low as it has strong supply chain
network all across the globe.

Resource based view
This model help in determining the availability of strategic resource which helps in
delivering effective products and services to the end customers. This helps organization
in maintaining competitive advantage to the company which leads to higher sustainable
growth and development of the business. Resources are the inputs which helps
business in performing the activities effectively and efficiently (Resource Based View of
the Firm, 2018).
The VRIO framework:
Valuable: The resources must be valuable for the firm which helps them in adding value
which leads to higher operational efficiency and competitive advantage (Barney, 2018).
Rare: The resources used by the firm must deliver unique strategy which helps
company in maintaining competitive advantage.
Inimitable: The resource used by the company must be valuable, expensive and are not
readily available which helps in maintaining competitive advantage in the market.
Organization: The organization must be well structured and must effectively use the
resources of the organization n order to maintain sustainable competitive advantage
(Cabrera-Suárez, García-Almeida and De Saá-Pérez, 2018).

SWOT analysis
SWOT (strength, weakness, opportunity and threat) analysis is a strategical
framework which helps in evaluating the competitive position of the company effectively
and efficiently.
Strength: It helps in analysing the core strengths of the company which helps company
in maintaining the competitive position in the market.
For example: The major strength of Starbucks is that it has strong brand image and
effective strong supply chain. They offer high quality products to consumers.
Weakness: This stop company to operate or perform at its optimum level which
eventually leads to lower operational efficiency and profitability for the business. The
must focus on such areas to maintain the competitive position in the market.
Example: Starbucks has high price and imitable products (Abdel-Basset, Mohamed,
and Smarandache, 2018).
Opportunity: This factor gives favourable opportunity to the business which can lead to
higher sustainability growth and development of the business.
Example: Expansion and diversification in developing countries, introducing new
products gives Starbucks major opportunity to grow their business.
Threat: This factor helps in identifying the threats to the business which can hamper the
operational efficiency of business. Threats like increase in competition, rise in prices of
raw material, etc.
Example: Major threat to Starbucks is that rise in competition with cheaper alternatives.
CONCLUSION
From the above study it has been summarized that, strategy development models helps in
maintaining competitive position in the market using SWOT analysis and porter's five fore
model. It helps in analysing factors using PESTLE analysis which influence operations of the
business. It further highloghts resources of the company using resource based model.

REFERENCES
Books and journals
Abdel-Basset, M., Mohamed, M. and Smarandache, F., 2018. An extension of
neutrosophic AHP–SWOT analysis for strategic planning and decision-
making. Symmetry.10(4).p.116.
Barney, J.B., 2018. Why resource‐based theory's model of profit appropriation must
incorporate a stakeholder perspective. Strategic Management Journal.39(13).
pp.3305-3325.
Cabrera-Suárez, M.K., García-Almeida, D.J. and De Saá-Pérez, P., 2018. A dynamic
network model of the successor’s knowledge construction from the resource-and
knowledge-based view of the family firm. Family Business Review.31(2).pp.178-
197.
Carraher, S.M., 2018. An examination of an instrument to measure Porter’s Five Forces
Model. In International Journal of Arts & Sciences Conference at Harvard
University.
Fozer, D and et.al., 2017. Life cycle, PESTLE and multi-criteria decision analysis of
CCS process alternatives. Journal of cleaner production.147.pp.75-85.
McDONALD, M.A.L.C.O.L.M., 2016. Strategic marketing planning: theory and practice.
In The marketing book(pp. 108-142). Routledge.
Online
Resource Based View of the Firm. 2018. [ONLINE]. Available
through:<http://design4services.com/concepts/resource-based-view-of-the-firm/>
Scanning the Environment: PESTEL Analysis. 2016. [ONLINE]. Available
through:<https://www.business-to-you.com/scanning-the-environment-pestel-
analysis/>