Strategy Development Tools

This article discusses various strategy development tools used by companies to achieve their goals and objectives. It covers Pestle analysis, SWOT analysis, Porter Five Force Model, and Ansoff strategy. Examples of these tools are provided for companies like Tesco, Wes Farmer, and Apple.

Strategy Development tools
Strategy development tools

Strategy Development tools
Strategy tools used by the companies
There are various strategy development tools that are considered by the companies so that it
could be easy to attain the set goals and objectives of the company. If these strategy tools are
taken into consideration then it smoothen the working pattern of the business in the highly
competitive market area. In this paper, the different strategy tools will be described that are
beneficial for the overall operations of the company.
Pestle analysis
It can be said that Pestle analysis is considered as one of the essential strategy tools that is used
by the companies so that it could be easy to evaluate the external business scenario. Pestle
analysis is the tool that is considered to examine the macro environmental factors that impact the
performance of the business. This tool is useful as it helps in starting the new business or it is
used at the time of entering into the foreign market. Pestle analysis tool is considered by the
marketers as it helps to evaluate and monitor the macro environmental factors that can affect the
growth and brand image in the market. This tool highlights the basic factors such as political,
economic social, technological, legal and environmental. Therefore, it can be stated that
companies use this tool to focus on the different factors that are impacting the overall growth of
the company. The Pestle analysis tool can be described with the help of the example of Tesco
Company (Chiang, Chen and Ho, 2016).
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Strategy Development tools
(Source: Business to you, 2019).
Pestle analysis of Tesco Company
1. Political factor
There are various negative implications that affected the bottom line of the company. One of the
example, in 2014 the group of local councils in the UK asked the government for the new powers
in relation to the tax rate of the supermarkets. But the initiative was also not accepted by the UK
government to avoid the increasing ratio in the price. So, this has also affected the growth of the
company in the competitive business world.
2. Economic factor
Cost of labor can be considered as the important economic aspects that affected the revenue of
the supermarket chain. The annual wage of the organization also accounts to GBP 4.5 Billion.
1% of the labor costs have been enhanced in relation to the GBP 45 Million. The national
minimum wage to GBP 7.20 has been introduced in 2015 and it also showcases the overall
increase of the 11%. So, it can be stated that the enhancement in the national minimum wages in
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Strategy Development tools
the UK has cost the Tesco Company by GBP 495 Billion (Shatskaya, Samarina and
Nekhorosheva, 2016).
3. Socio economic factor
Tesco Company is emphasizing on the UK customers so that it could be easy to offer the
services and to meet the demands of the customers. It has been examined that Obesity is one of
the major problem in the society and customers are focusing towards their health. So, the
company must focus on the changing behavior and demand in relation to the organic food. Also,
PWC report states that 65% of the UK shoppers are considered as the loyal shoppers, so the
company should avail the opportunity by maintaining the close ties with the customers.
4. Technological factor
The company introduced RFID technology to boost the in store experience of the customers.
Also, with the use of the mobile payment system the customers can easily pay their bills. From
London to Edinburgh there are 524 stores of the company who are using the applications to
maintain the customer base.
5. Legal factor
The company has faced different legal actions in relation to accounting fraud and misleading of
the investors. It is important for the company to conduct the activities according to the Food
retailing commission so that efficiency can be maintained.
6. Environmental factor
The company has focused towards the Van drivers who will not only consider the fuel saving
routes but also collect the unwanted plastic bags from the customers and recycle them properly.
Tesco has the aim of using the renewable sources and to generate 100% of the electricity by
2030 (Shatskaya, Samarina and Nekhorosheva, 2016).
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Strategy Development tools
SWOT analysis
It is considered as one of the strategic planning technique that assists the person in considering
strength, weakness, threats and opportunities. By considering this tool, the companies can easily
offer the information that helps to match the resources and capabilities of the company in the
highly competitive market. It can also be considered as the instrumental strategy that focuses on
formulation and selection. SWOT Analysis stands for strength, weakness, opportunities and
threats that are present in the competitive market. It can be analyzed that the strength of the
company emphasizes on the resources and capabilities that boost the competitive advantage. The
factor related with weakness emphasizes on the distribution channel and brand image of the
company. The opportunities exist in the market that should be grabbed by the companies so that
it could be easy to boost the growth. The threat of the company can affect the sales and profits of
the organization (Bell and Rochford, 2016).
Example of Wes Farmer Company
Strength
 Good brand image
 Large number of stores
 Sales is also done through online formats
 Focuses on the community development initiatives
 Maintain customer service
Weakness
 Low geographic presence
 Always under scrutiny in relation to the important decisions.
 Current financial crisis of Australia can affect the financial stability
 High business risk
Opportunity
 Can expand outside the Australian market
 Enhance quality of the services
 Employee and customer loyalty initiatives can be considered.
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Strategy Development tools
Threats
 High competition level
 The competitors are Myer and Woolworth
 Economic downturn
 Similar products offered by the companies (Bull et al., 2016).
Porter Five Force Model
It is considered as the tool that helps in examining the competition of the company. It also
emphasizes on the economies that determine the different forces such as the bargaining power of
the suppliers, buyers, threat of substitution, threat of new entry and also competitive rivalries.
These all are the forces that helps in determining the operations of the company. In relation to
Porter five force the focus is given on identifying the power that lies within the business
situation. It has been seen that this model helps in understanding the strength of the company in
context to the competitive position. The strategic analytics consider this model to focus on
understanding the new products and services potential to attain profits (E. Dobbs, 2014).
Example of Porter Five force model of Apple Company
 Bargaining power of the suppliers
It is weak as the major influence is on the suppliers in relation to the demands of the
company and the competitors. The bargaining power is weak as the focus of the company
is on the supplier concentration. It is seen that company has the advantage of having the
different suppliers on the global platform and due to this the suppliers cannot put their
demand on the priority. Bargaining power of buyers
The company is highly affected as it determines the purchasing power and also the
decision of the buyers. In relation to the Apple Company, there is strong bargaining
power as the switching cost is low but the customers have the vast knowledge. It is
simple for the customers to switch the company. Threat of substitution
It is weak as technology, online services and consumer electronics are provided by the
company. The products of the company have the weak force because of the limited
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Strategy Development tools
resources that exist in the market. It is easy for the customers to substitute the products of
the company easily with the other brands. Threat of new entry
It is low as the cost incurred in starting up the business is high. It is not possible for all
the companies to invest the huge amount in the overall activities of the company. Competitive rivalries
The company is facing the high level of competition. There are many competitors that are
present in the market such as LG and Samsung (Mukherjee, 2018).
Ansoff strategy
It is a strategic planning tool that assists the company that helps the executives, senior managers
and marketers to devise the strategies for attaining growth in future. This strategy focuses on the
new and existing products that are present in the market. The Ansoff strategy focuses on the
growth strategies which set the direction for the business. The tool can also be considered as the
communication tool that assists the growth strategies of the company. In this tool there are four
stages such as market penetration, product development, market development and
diversification. In this strategy, the company focuses on attaining the growth and also maintains
the products that are introduced in the market (Oh, Cho and Kim, 2015).
Practical example of Samsung
 Market penetration
In relation to this strategy, the company drops the prices of the phones in few months so that they
can launch their new model. The company also focuses on enhancing the existing market share
so that it could be easy to maintain the competitive market share.
 Market development
The company has started the business based in Su Dong. This is also one of the attributed in
relation to market development strategy. The company also emphasized on the global presence
that helps to develop the brand recognition and brand loyalty in the market.
 Product development
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Strategy Development tools
Samsung considers the combination of boosting the existing products to completely launch the
new products under the same brand name.
 Diversification
The company has also created the different smart phones for different market segments that
helped to boost the success ratio in the market. This can help the company in attaining growth in
the highly competitive market.
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Strategy Development tools
References
Bell, G.G. and Rochford, L., 2016. Rediscovering SWOT’s integrative nature: A new
understanding of an old framework. The International Journal of Management Education, 14(3),
pp.310-326.
Bull, J.W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C.,
Lambini, C.K., Rawlins, M., Baral, H., Zähringer, J. and Carter-Silk, E., 2016. Strengths,
Weaknesses, Opportunities and Threats: A SWOT analysis of the ecosystem services
framework. Ecosystem Services, 17, pp.99-111.
Business to you., 2019.Frameworks. [Online]. Available at:
https://www.business-to-you.com/frameworks/. [Accessed on 19 aug , 2018].
Chiang, Y.M., Chen, W.L. and Ho, C.H., 2016. Application of analytic network process and two-
dimensional matrix evaluating decision for design strategy. Computers & Industrial
Engineering, 98, pp.237-245.
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.
Mukherjee, I., 2018. Applying Porter’s Five Force Framework in Emerging Markets—Issues and
Recommendations. In Strategic Marketing Issues in Emerging Markets (pp. 307-316).Springer,
Singapore.
Oh, C., Cho, Y. and Kim, W., 2015. The effect of a firm's strategic innovation decisions on its
market performance. Technology Analysis & Strategic Management, 27(1), pp.39-53.
Shatskaya, E., Samarina, M. and Nekhorosheva, K., 2016.PESTEL analysis as a tool of strategic
analysis in international markets. Scope academic house b&m publishing, p.47.
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