STRATEGY DEVELOPMENT TOOLS1|P a g e Table of Contents Introduction.........................................................................................................................................2 Strategic Development Models.......................................................................................................2 Strategic Model 1: PESTLE Analysis.........................................................................................2 PESTLE Analysis of PepsiCo..................................................................................................3 Strategic Model 2: SWOT Analysis.............................................................................................3 SWOT Analysis on Commonwealth Bank of Australia (CBA)............................................4 Strategic Model 3: Porter’s Five Forces Model.........................................................................5 Porter’s Five Forces Analysis in CSL Ltd..............................................................................5 Conclusion..........................................................................................................................................5 References............................................................................................................................................7
STRATEGY DEVELOPMENT TOOLS2|P a g e Introduction Strategy Development is required in present complex business environment, as due to complex business nature the management of organisation has to critically analyse each and every factor in business environment and plan and prepare accordingly so that the plannedactivities couldleadtheorganisationtowards achievement of organisational goals.Inordertoeffectivelyanalyseandmanagethebusinessenvironmentthe managementoftheorganisationrequiresstrategicdevelopmenttools,thathelpthe organisation in effective analysing of the business environment both internal and external andtodevelopbusinessstrategiesthatfulfiltheneedsandrequirementsofthe environment and help the organisation to achieve its goals(Whittington, et al., 2016). The essayisfocusedtowardsanalysingsuchstrategicdevelopmenttoolsandtheir implementation in today’s business. Strategic Development Models Strategic Model 1: PESTLE Analysis PESTLE Analysis is a strategy management tool that helps an organisation to analyse its external environment and the key factors influencing the organisational performance. It providesananalysisofthePolitical,economic,social,technological,legaland environmental factors of the external environment, such factors have direct as well as indirect affect on the working of the business activities(Yüksel, 2012). Political factors are related to the governmental policies and the political nature of the nation in which the business is operating it analyses the effect of such factors on the working of business. Economic factors have their direct impact on the business profitability as the economic factors include the interest rates, inflation, consumer’s disposable income and the economic growth of the country. Such factors analyse the return on investment for the organisation. Social factors include the beliefs and values that people follow in the societies of the target market. As the cultural and religious beliefs of customer base has adverseeffectontheorganisationalperformance.Technologicalfactorshelpthe organisation in analysing the technological changes in the environment and how they can impact the organisation. Legal factors analyse the laws and regulations of the nation such as health and safety law, employment laws, consumers rights protection act and product safety and quality standards. The last element of analysis is the environmental factors which helps the organisation in defining its responsibility towards environmental changes
STRATEGY DEVELOPMENT TOOLS3|P a g e andtheactivities thatneed tobeconductedinorder toreduce theeffect of such environmental changes(Perera, 2017). PESTLE Analysis of PepsiCo PepsiCo being among the largest selling beverage and snacks brand has to effectively analyse the external environment and develop a strategic plan in order to overcome the effect of external environment. PepsiCo deals in beverage and eatables, and the government of the country ensures that the product provided is of set quality standards and safe for consumption. The economic factor of an economy affects the business of the PepsiCo as the disposable income of a consumer or the inflation within the economy will help PepsiCo in developing competitive prices and be able to stay in market. PepsiCo should focus on developing an image of healthy food and beverage brand in the society, so that the target market can be attracted towardsproduct.PepsiCoshouldfocusonitsonlinepresenceonsocialmediaor implement online advertisement strategies in order to focus and attract its customer and meet the requirement of recent technological changes. PepsiCo has set quality standards for its product and ensure the safety and security of its workers in order to meet the legal requirements of the nation. Pepsi is focused on improvement of water efficiency in order to reduce the impact of water scarcity on the people(PepsiCo, 2016). Strategic Model 2: SWOT Analysis SWOT Analysis is an analytical tool that helps an organisation in order to analyse its internal capabilities (strengths) that helps the organisation in achievement of its goals and negative aspects which can influence the effective performance of the organisation. Also, the SWOT analysis helps an organisation in identifying the external or future opportunities that the organisation can use in future as a competitive advantage or to improve the organisationalperformance,alongwithanalysingthethreatsthatmayariseinthe business environment that may affect the business working or development. Conducting SWOT Analysis helps the organisation in analysing the above-mentioned factors and develop a strategic plan that can lead the organisation towards the achievement of set goals and objectives(Helms & Nixon, 2010).SWOT Analysis is a tool that helps the organisation in identifying the impact of external factors that are beyond organisation’s control, and making the use of the internal factors to overcome the impact of those external factors.
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STRATEGY DEVELOPMENT TOOLS4|P a g e Figure1SWOT Analysis Tool (Source:(Sarsby, 2016)) SWOT Analysis onCommonwealth Bank of Australia (CBA) Being a leading company in the Australian industry, the Commonwealth Bank of Australia has numerous competitive benefits or the strengths, such as strong brand portfolio, effective market strategies, highly skilled workforce and effective training and development programs, strong cash flow and a tack record of product innovation, with such strengths the company has established a reliable and customer base which contributes to company development. Along with such strengths the company has certain weakness, as the company has developed a limited marketing strategies and a lot of products from the portfolio are not advertised effectively, also the company is a leader in itscore business but the expansion in other segments does not have enough market share and has a limited success. The diversified portfolio has resulted in lack of effective management of the products that the available for the customers. The company has an opportunity to expand its business online as most of the customer now-a-days search for products online, and also with the introduction of social media the customers are more active on internet. The lower interest rates by the Australian government in recent years is an opportunity for the company to invest and expand its operations. Political uncertainties in the nation, the technological advancements by its competitors are the threat for the
STRATEGY DEVELOPMENT TOOLS5|P a g e Commonwealth Bank of Australia, which can affect the business of the organisation in near future(Commonwealth Bank of Australia, 2019). Strategic Model 3: Porter’s Five Forces Model ThefiveforcesmodeldefinedbythePorter’s,helpstheorganisationanalysingits competitive environment and develop strategies in order to beat the market competition and can achieve the set objectives and goals of the organisation(Magretta, 2012). The five force model is based on the analysis of the five market factors that include the level of existing competition in the industry, the possibility of entry of new firms in the industry, the power supplier poses while delivering the materials required by organisation, the power of customer to bargain for the price of the product and the availability of the substitute product within the market.As such factors help the organisation in critically analyse its industry competitive nature, and focus on its own organisational structure and policies so that the effect of such factors on the organisation’s performance can be reduced(Dobbs, 2014). Porter’s Five Forces Analysis in CSL Ltd. The CSL Ltd. deals in pharmaceutical and biotechnological industry, such industry has a strong product differentiation, requires high investment and various legal formalities to enter, as a result such industry has a low threat of new firms in the industry. The suppliers in pharmaceutical industry in Australia are also numerous as compared to the companies therefore the power of suppliers is low in the industry as the company can easily shift to othersubstitutesupplierfortheresources,bydevelopinganeffectivesupplierand customer relation can help the CSL Ltd. in reducing the threat of power of supplier for the future uncertainties. The buyers in an industry have a high bargaining power due to high competitionintheindustry,aswithincreaseincompetitionwithintheindustrythe customers get more substitute for a single product and also have the power to bargain for better price in the industry. CSL Ltd. should focus on developing innovative and unique products along with competitive rates so that the customers can be attracted towards the company’s product andcanreducethe chanceof movingof customer towards the available substitute. CSL Ltd. operates in a very competitive and complex industry as the pharmaceutical industry in Australia has a number of firms operating which creates an intense competition, but the low entry barrier is a benefit in this competitive industry and for CSL Ltd(CSL Ltd., 2019).
STRATEGY DEVELOPMENT TOOLS6|P a g e Conclusion The strategic development models help the organisations in developing and analysing the organisational environment and prepare strategies accordingly. In order to analyse the various aspects of the environment there are various strategic development tools that helps the organisation in effectively develop strategic plans and policies which ensures the organisationalsuccessintheindustry.AsdiscussedPESTLEanalysishelpsan organisation in effectively analysing the impact of the external factors such as government policies,socialandeconomicconditionofnation,astheSWOTanalysishelpsthe management in focusing upon its internal condition and find out the future opportunities availableintheindustry,andthePorter’sfiveforcesmodelhelpsinanalysingthe competitive factors within the industry and find out ways that can help the organisation in maintaining a competitive edge in the industry.
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STRATEGY DEVELOPMENT TOOLS7|P a g e References CommonwealthBankofAustralia,2019.AboutCommonwealthBank.[Online] Availableat:https://www.commbank.com.au/about-us.html?ei=CB-footer_about-commbank [Accessed November 2019]. CSLLtd.,2019.OurCompany.[Online] Availableat:https://www.csl.com/our-company [Accessed November 2019]. Dobbs, M. E., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates.Competitiveness Review,24(1), pp. 32-45. Helms, M. M. & Nixon, J., 2010. Exploring SWOT analysis – where are we now? A review of academic research from the last decade.Journal of Strategy and Management,3(3), pp. 215-251. Magretta, J., 2012.Understanding Michael Porter: The Essential Guide to Competition and Strategy.1 ed. United States of America: Harvard Business Press. PepsiCo, 2016.PepsiCo Launches 2025 SustainabilityAgenda Designed to Meet Changing ConsumerandSocietalNeeds.[Online] Availableat:https://www.pepsico.com/news/press-release/pepsico-launches-2025-sustainability- agenda-designed-to-meet-changing-consumer-a10172016 [Accessed November 2019]. Perera, R., 2017.The PESTLE Analysis.First ed. s.l.:Nerdynaut. Sarsby, A., 2016. The SWOT Framework. In: A. Sarsby, ed.SWOT Analysis.England: Leadership Library, pp. 7-11. Whittington, R. et al., 2016.Exploring Strategy: Text and Cases.Eleventh ed. s.l.:Pearson Education .
STRATEGY DEVELOPMENT TOOLS8|P a g e Yüksel, İ., 2012. Developing a Multi-Criteria Decision Making Model for PESTEL Analysis. International Journal of Business and Management,7(24), pp. 52-66.