SWOT and PORTER FIVE FORCES Analysis

Running head: STRATEGIC MANAGEMENT
Strategic management
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Executive summary
The aim of this report is to discuss about the effectiveness of swot and porter five forces analysis
and how they can be used for maximum utility. In addition, both the theories are being critically
evaluated based on different views of the authors. It is identified that both these theories are
having advantages as well as disadvantages. DHL is considered for this report and it is identified
that it is the largest logistic company in the world. Both swot and porter five forces are applied
on DHL and different challenges and opportunities are being identified. It is concluded that swot
analysis helped to identify the internal competencies of DHL while porter five forces helped to
identify the industry competitiveness of them.

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Table of Contents
Introduction......................................................................................................................................3
Findings...........................................................................................................................................3
Overview and critique of SWOT.................................................................................................3
Overview and critique of Porter five forces................................................................................5
Comparison of the two theories.......................................................................................................7
Swot analysis...............................................................................................................................7
Porter five forces analysis............................................................................................................9
Conclusion.....................................................................................................................................12
Recommendations..........................................................................................................................13
Reference.......................................................................................................................................14

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Introduction
The current business scenario demands effective operational mechanism mainly from the
firms operating in the logistics sector. This is due to the reason that with the growing
opportunities in the international business, complexities are also increasing. Thus, it is getting
more important for the logistic firms to better integrate their operations in dealing with the issues
(Cosimato and Troisi 2015). DHL is one of the largest logistic firms in the world with having
their presence in majority of the countries. They are also known for their extensive operational
mechanism.
This report will discuss about the negative and positive factors in relation to the operation
management of DHL. In doing so, SWOT and Porter five forces analysis will be used. Both
these theories will be compared and contrasted along with determining their impacts on the
organization. Based on the identified factors, a few recommended steps will be discussed.
Findings
Overview and critique of SWOT
Swot analysis will be used to determine the strengths and weaknesses along with the
potential opportunities and threats for DHL. This is due to the reason that with the help of the
swot analysis, the key and relevant factors for DHL can be identified. The major advantages that
can be gained by using swot are lower level of difficulties in implementing. This is due to the
reason that swot is only having four elements that can be reviewed from any perspectives and
thus not many specifications will be required in doing the analysis of DHL (Al-Araki 2013). In
addition, it should also be noted that with the help of swot analysis, the future trends can also be
identified. This will help in designing the operational requirements for the future factors. Swot

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analysis of DHL will also help identify the core competencies due to the reason that the core
strengths and weaknesses can be identified. Determination of business objectives will also be
effective with the help of swot analysis due to the reason that based on the opportunities and
threats, the future scenario can be identified.
However, on the other hand, it should be noted that swot analysis is having a number of
limitations to be faced. One of the major limitations is lack of control over the external factors
such as economic and legal factors. Hence, it is difficult to initiate the swot analysis in
accordance to the changing external business scenario. Moreover, it should also be noted that
market factors are not being considered in the swot analysis but in the current time, market
factors are the major influential factors for the business and they are rapidly changing. Thus, it
can be concluded that swot analysis can provide a strategic overview but it will not be effective
to cover the specific requirements of the company. In regards to the effectiveness of the swot
analysis, it is stated by Bull et al. (2016) that this analysis can act as an ecosystem services
framework for the companies. This is due to the reason that with the help of swot analysis, DHL
can have the understanding about both their competencies and areas of improvement.
Accordingly, they can design their future business objectives.
On the other hand, it is stated by Blockeel et al. (2016) that even though swot analysis
will provide the strategic overview for the firm but it is not enough to state objectives on the
basis of it. This is due to the reason that swot analysis is not considering the external factors. It is
stated by the authors that swot analysis should only be used as the base for other analysis to be
done. This will enable the firms to have the better idea about the market process. In the case of
DHL, they will only be able to gain the internal factors over the much fluctuating external factors
also. Thus as per the authors, swot analysis should be done on DHL in order to have the basic

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understanding about their internal strategic approaches and can further work on more specific
sections. However, apart from other authors, Gurel and Tat (2017), stated a different approach
regarding the effectiveness of swot analysis. According to the authors, swot analysis will help the
business organizations in gaining the understanding of strategic and competitive position in
comparison to the competitors. This is due to the fact that with the help of swot, DHL will able
to review their position in the global market and accordingly they can further use other strategic
tools. The authors have also stated that swot analysis can also help DHL to have the idea about
the extent to which they are capable enough to take on the change in the external factors. Thus,
prior to the determination of the external factors for DHL, they will be ready with their internal
competency.
Overview and critique of Porter five forces
In the current business scenario, determination of the competitive factors in the market is
getting more important due to the reason that competition is increasing rapidly. Each of the
companies should have the understanding about intensity of the competitive forces in the
particular industry. In this case, the porter five forces will be the most effective due to the fact
that this model determines the major five competitive forces that are relevant for the business
organizations (Gans and Ryall 2017). These five competitive forces are bargaining power of the
buyers, bargaining power of the suppliers, threat of new entrants, threat of substitutes and
competitive rivalry. Bargaining power of the buyers refers to the determination of the extent to
which buyers or customers are having the upper hand in influencing the price and market
potentiality of the firm. Bargaining power of the suppliers refers to the extent to which the
suppliers and partners are having the influence in pricing decisions. Threat of new entrants refers
to the probability of the entry of new entities in the industry and to the extent to which DHL will

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face the challenge of increased competition in the market. Threat of substitutes refers to the
degree of substitute products or services available in the market. The more will be the substitute
services available in the market for DHL, the more will be the competition. Lastly, competitive
rivalry refers to the intensity of the competition among the players operating in the particular
segment and the extent to which they are aggressively competing in the segment. Thus, it can be
concluded that with the help of the porter five forces, the entire competitive scenario can be
identified.
However, in reviewing the effectiveness of the porter five forces, different authors have
given different sets arguments for and against. According to Dobbs (2014), initiation of the
porter five forces analysis will help DHL in having the understanding about the intensity of
different competitive forces. Moreover, it is also being stated by the author that this model can
also be beneficial in determining the future opportunities. This is due to the reason that with the
identification of the threat of new entrants and bargaining power of the buyers, the future growth
of the sector can be judged. Furthermore, Prasad and Warrier (2016) stated that porter five forces
model is more effective and applicable in the current business scenario. This is due to the reason
that this model can be easily aligned with the changing business scenario and can even determine
the change in the competitive forces. Thus the complexities of changing business environment
can be dealt with this model.
However, on the other hand, there are number of arguments against the model are given
by different authors. According to Van Alstyne, Parker and Choudary (2016), non market forces
are not being considered in this model. This is due to the fact that porter five forces model is
based on the competing market factors and thus factors such as legal and political are not be
considered. However, these factors such as change in the political scenario can have huge impact

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on the competitive forces. This is one of the major disadvantages of porter five forces model. In
addition, Huang et al. (2015) stated that preventive actions cannot be identified with the help of
this model. This is due to the reason that porter five forces model is only limited to providing
probable competitive scenario and not the actions for mitigating the identified issues. Thus, it
will be difficult for the companies such as DHL to have the preventive actions in overcoming the
identified issues. Therefore, it can be concluded that initiation of the porter five forces analysis
will help the business firms in having the general idea about the level of competition to be faced
in operating in a particular segments. On the basis of the competitive factors identified from this
model, DHL can design their further strategies accordingly. It should also be noted that with the
help of the porter five forces analysis, DHL will be able to determine the extent to which their
prime competitors will pose threat to them by determining the threat of substitutes. Thus, DHL
will have the idea about how to differentiate from their competitors and gain competitive
advantages in the market.
Comparison of the two theories
In the above sections, both the swot and porter five forces analysis are being critically
evaluated based on their advantages and limitations. However, these theories should be
implemented on DHL in order to have the proper identification of different factors. The
following sections will evaluate the effectiveness of DHL’s operational management on the basis
of swot and porter five forces analysis.
Swot analysis
Strengths  DHL is the largest logistic firm in the world with having the maximum
fleet size. Thus, their operational capacity is also the highest among their

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competitors.
 DHL is having the largest air fleet of more than 80 aircrafts. Thus, they
are way ahead of their competitors in terms of speedy and accurate
delivery (Oflac et al. 2015).
 Extensive global presence of DHL is also complementing in offering
their clients wide array of choices in terms of destinations.
Weaknesses  One of the major weaknesses for DHL is their rising cost. This is due to
the reason that with time, the internal cost of operation for DHL is
increasing and this is posing challenges in offering competitive price of
services.
 Difficulties in the transport mediums are causing DHL hindrances in their
end to end logistic solutions. This is mainly due to the fact that DHL do
not have own transport mediums across different locations (Klumpp,
Clausen and ten Hompel 2013).
 Majority of the supply chain partners of DHL are external and thus they
do not have the entire control over their operational processes.
Opportunitie
s
 Opportunities for integrated logistics are getting increased across the
world with providing DHL advantages to tap the growing market.
 Addition of more aircrafts in the fleet will help DHL to gain competitive
advantages over their competitors. This will also enable them to reduce
the time consumed in end to end logistic process (Akamn and Baynal
2014).
 Automation in their internal assembly line will also help to reduce the

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time consumption. This is due to the reason that automation will help to
make inbound and outbound logistics more efficient.
Threats  Emergence of issues from the side of the partners will pose threats for
DHL. This is due to the reason that DHL is very much depended on the
external entities.
 Increase in the cost of operation due to the maintenance of huge
operations will pose challenge for DHL in managing their business
viability (Erkan 2014).
 Emergence of more alternatives for the customers other than DHL will
also pose threat in managing their operational effectiveness.
Porter five forces analysis
Bargaining power of the buyers  Bargaining power of the buyers for DHL is moderate
due to the presence of number of logistic partners in the
global market.
 However, the advanced infrastructure of DHL over
their competitors is helping in retaining the buyers.
This is due to the reason that buyers will not get the
advantages from other entities as from DHL (Switala
2013).
 The extensive infrastructure and operational capability
of DHL is also helping in reducing the bargaining
power of the buyers. This is due to the reason that

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extensive range of areas being covered by DHL are
above all their competitors.
Bargaining power of the
suppliers
 Bargaining power of the suppliers is high due to the
reason that DHL is very much dependent on the
external partners.
 Majority of the transportation for DHL is being done by
the external partners. Thus, the operational
effectiveness of DHL is dependent on them (Cichosz et
al. 2017).
 Changes in the business policies of the external agents
will also influence the operations of DHL.
Threat of new entrants  Threat of new entrants is moderate because it is
difficult to match the operational leadership of DHL by
the new entrants.
 Huge investment and branding activities will require
for the new entrants in order to match the level of DHL
(Luttgens and Diener 2016).
 However, the intensity of the new entrants is more in
the local market level where there are number of small
and medium entities are competing with DHL.
Threat of substitutes  Threat of substitutes is high for DHL due to the reason
that there are number of similar sets of competitors
such as DTDC and FedEx are operating.

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 All these competitors are offering similar services to
the customers at similar price points (Schwenger,
Straub and Borzillo 2014).
 Switching cost is lower for the customers and thus
variable customers are more in number in this sector.
Competitive rivalry  Competitive rivalry is high in this sector with cost
leadership is one of the major factors for gaining
market share.
 Various added services are being offered to the
customers in a bid to stay ahead in the competition.
 Market segments in the developed economies are
majorly saturated and hence the competitive rivalry is
more to stay in the leadership position.
Thus from the above two analysis of the operation management of DHL, it can be
concluded that both negative and positive factors for them are being identified. However, the
perspectives of the identification of the factors are denoting the differences between the
approaches of both these analysis. For instance, with the help of the swot analysis, it is being
identified that there are few areas such as brand value and market share where DHL is leading
over their competitors. On the other hand, there are some areas of improvement also being
identified such as higher cost of operation. Moreover, with the help of the Swot analysis, the
long term potentiality of DHL is also being identified. Hence, swot analysis helped to conclude a
business overview for DHL.

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However, the competitive scenario of DHL cannot be identified by swot analysis and it is
also important due to the fact that internal factors identified above will be influenced by the
competing factors. In this case, porter five forces analysis is effective. From the above analysis,
it is identified about how the different competitive forces will have impact on the DHL and the
extent to which the operational effectiveness of DHL will reduce these impacts. From the above
porter five forces analysis, it is identified that threat of substitutes is more for them and it is
important to leverage on their extensive market coverage to reduce this threat. Hence, it can be
concluded that coordination between swot and porter five forces analysis will ensure that DHL is
having the effective understanding of their internal competencies and accordingly dealing with
the external competitive scenario.
Conclusion
Thus it can be concluded that each of different models of the strategic management
process are effective for the business entities from different perspectives. In this report, the
critical evaluation of swot and porter five forces analysis is being done and different factors are
also identified. From the critical evaluation of these strategic management tools, it is identified
that both these theories are having advantages as well as limitations. However, regardless of
these limitations, they are effective in identifying different competencies and challenges for the
organizations. This report discussed these two theories from the perspectives of operational
management of DHL. It is identified that DHL is having a number of strengths over their
competitors along with a few weaknesses. Moreover, it is also identified that they facing higher
threat of substitutes and competitive rivalry in their business operation. Bargaining power of the
suppliers is also high for DHL and this will affect their operational effectiveness in the long
term. On the other hand, it is identified that DHL is having extensive market coverage and one of

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the most efficient players in providing end to end logistics solutions. Thus, they should leverage
their infrastructural leadership in differentiating their services from that of their competitors.
This will help them to reduce the intensity of the threat of substitutes in the long term. Moreover,
it can be concluded that they should have different sets of operational approaches in different
regions in accordance to different market forces.
Recommendations
 It is recommended that DHL should reduce their dependency over the external partners in
order to reduce their bargaining power. This will ensure that DHL will have more control
over their forward integration process.
 It is also recommended that DHL should have sizable portion of transportation modes
other than the aircrafts. This is due to the reason that presence in different transportation
modes will ensure more market penetration for DHL.

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