Strategy Development Tools and Their Application in Real World Businesses

This essay discusses four strategy development tools and their application in real world businesses. The tools include PESTLE analysis, SWOT analysis, Five Forces analysis, and Ansoff Matrix. Real world examples of McDonalds, GlaxoSmithKline, PepsiCo, and Apple Inc. are used to illustrate the application of these tools.

competetive strategy
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Essay
Strategy development tools are considered as significant management tools that provides
organisations with various benefits while enabling them to create and execute decisions in
thought out manner. Organisations collect valuable data to analyse and process them
according to strategy development tools to fulfill organisational vision and mission
( Carpenter, et al., 2012). Contemporary organisations utilise various strategy development
tools out of which four tools will be discussed in this essay along with applying them in real
world businesses to analyse and find out how businesses utilise developmental tools.
Pestle analysis
PEST or PESTLE analysis tools are mostly utilised by organisations when they plan to enter
fresh market as it helps businesses understand and acquire valuable information regarding
new business environment. PESTLE analysis framework analyses political, environmental,
social, technological, legal and economic environment of firms. This tool is also used by
management at regular intervals to analyse present environmental constraints and external
changes that needs to be recognised timely for smooth running of the business (Gupta, 2013).
McDonalds is one of the leading organisations dealing in chain business of fast food products
and making PESTLE analysis of the company will help in analysing its external factors while
working in an international level. Political analysis of McDonalds reveals that the company
has expansion opportunities due to international recognition gained by providing quality
products. Economic conditions show that McDonalds is at a favourable position since it tries
and enter developed and developing countries only which drive sales for the company
without facing much distress. Socially, the company have to face many challenges especially
due to the changing demands and lifestyle trend in which customer prefers consuming freshly
cooked and healthier food rather than fast food products. McDonalds have always remained
ahead technologically and thus technological factors shows greater scope for the company.
Legal constraints again bother company many times that affects overall sale of the company
particularly while dealing with its supply chain partners situated at diversified countries.
Environmental factors do affect company especially during the times of drought and famines
that affects its production due to insufficient raw materials like food products and vegetables
(McDonald's, 2018).

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SWOT analysis
SWOT analysis is yet another very useful strategy development tool utilised immensely by
management to analyse strengths, weaknesses, opportunities and threats faced by
organisation. This tool not only assists managements in identifying current business position
by identifying strengths and weaknesses, but also makes them aware of internal and external
threats faced and how they can be turned into opportunities. This tool is mostly used while
formulating business plans to analyse significant factors affecting current position of business
along with enabling management to determine future policies and business course. Since this
tool helps in taking crucial decisions at various operational levels, many education,
community and health related firms prefers SWOT analysis over the others (Gurel & Tat,
2017).
GlaxoSmithKline (GSK) is one of the Australian pharmaceutical company that will show
how they utilise SWOT analyses for measuring their internal and external business
environment. Strengths identified in GSK is its global manufacturing units along with
efficient supply chain management that focuses on developing business worldwide.
Innovation and technology are also considered by the firm that adds to its strengths along
with strong financial position and diversified product portfolio. Weaknesses can be seen in
GSK’s internal management as it lacks managerial capabilities because in the past history,
GSK have shown few failures from management side. However, opportunities still lay in
front of GSK due to strong assets and financial position seen for entering into more
innovative segments like biologic and antibodies products development. Threats are also
constant for the company due to higher expectations from consumers side along with change
seen in operating country demographics (GlaxoSmithKline Australia Pty Ltd., 2018).
Five forces analysis
Five forces analysis of Michael Porter is another significant development tool that helps
managements of firm in analysing competitive position of their company within the market or
country it operates in. Five forces analysis helps in determining intensity in which
competitors of related industry behaves while competing along with formulating marketing
mix for the company after analysing five significant factors. Factors include customers
bargaining power, suppliers bargaining power, threat of new entrant, rivalry among
competitors and threat from substitutes. This 5F factors helps businesses in formulating

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marketing plan as well as analysing organisation’s competitive position for determining
future business course ( Omsa, et al., 2017).
PepsiCo is one of the popular brands dealing in food and beverage industry that shows how
market competition and rivalry between strong market players can be analysed by analysing
five forces analysis. The buying behaviour seen among PepsiCo’s customers show that
company faces strong force here as there are lots of competitors in food and beverage
industry who offers similar products like PepsiCo brand. Threat of substitute is also strong
for PepsiCo, however, threats from new entrants shows comparatively weak force as in food
industry, customers prefers selecting reputed and established brands. Suppliers bargaining
power is also weak for PepsiCo due to high availability of suppliers for food supplies.
Nevertheless, PepsiCo have to face strong rivalry with its competing firms like Coca Cola
and Dr Pepper Snapple (Smithson, 2017).
Ansoff Matrix
Developed by Igor Ansoff, Ansoff matrix is a development tool that is used by managements
to identify risk related factors while conducting business operations. This tool is very useful
for organisations as it assists management in formulating growth related strategies in
comparatively easy and unpretentious manner. Ansoff matrix allows firms with expansion
strategies by identifying strategic options along with combining them within the matrix for
evaluating risks in business operation at different levels. Categories covered under Ansoff
matrix tool are diversification strategy, product development, market penetration and market
development strategies (Gianos, 2013).
Ansoff matrix can be applied in Apple Inc. to analyse its business level strategies. Market
penetration shows that company penetrates into markets to sell more products to new and
existing customers by reducing costs and making promotional strategies. Apple needs to
release updated products constantly so that its customers remain engaged with the company.
Apple also needs to develop its products at regular intervals along with making partners with
their firms. Since the company uses its own operating system only, reshuffling of existing
product related strategies can gain more customers loyalty. Market development refers to
those strategies in which new market is approached for market development and expansion
and since Apple is a reputed brand, it can easily enter into new marketplace. Diversification
is very similar to market penetration and requires launching of new products in new market.

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Apple follows this strategy and do not hesitate in risking their brand while launching new
products in new marketplaces (Dudovskiy, 2018).

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References
Carpenter, M., Bauer, T. & Erdogan, B., 2012. Management Principles. s.l.:Creative
Commons.
Omsa, S., Abdullah, I. H. & Jamali, H., 2017. Five Competitive Forces Model and the
Implementation of Porter’s Generic Strategies to Gain Firm Performances. Science Journal
of Business and Management, 05(01), pp. 09-16.
Dudovskiy, J., 2018. Apple Ansoff Matrix. [Online]
Available at: https://research-methodology.net/apple-ansoff-matrix-2/
[Accessed 07 12 2018].
Gianos, J. F., 2013. A Brief Introduction to Ansoffian Theory and the Optimal Strategic
Performance-positioning Matrix on Small Business (OSPP). Journal of Management
Research , 05(02), pp. 107-118.
GlaxoSmithKline Australia Pty Ltd., 2018. GlaxoSmithKline Australia: About Us. [Online]
Available at: https://au.gsk.com/en-au/about-us/
[Accessed 07 12 2018].
Gupta, A., 2013. Environment & PEST Analysis: An Approach to External Business
Environment. International Journal of Modern Social Sciences, 02(01), pp. 34-43.
Gurel, E. & Tat, M., 2017. SWOT Analysis: A Theoretical Review. The Journal of
International Social Research, 10(51), pp. 994-1006.
McDonald's, 2018. McDona'ls annual Reports. [Online]
Available at: https://corporate.mcdonalds.com/content/corpmcd/investors-relations/financial-
information/annual-reports.html
[Accessed 07 12 2018].
Smithson, N., 2017. PepsiCo Five Forces Analysis (Porter’s Model). [Online]
Available at: http://panmore.com/pepsico-five-forces-analysis-porters-model
[Accessed 07 12 2018].