Strategic Development Tools: Analysis and Application in Business

This report provides an analysis of strategic development tools, emphasizing their significance in business planning. It critically evaluates three commonly used tools: SWOT analysis, PESTLE analysis, and Porter's Five Forces, to understand the macro and microenvironment within the business world,...Read More

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INDIVIDUAL ASSESSMENT

Table of Contents
INTRODUCTION................................................................................................................................2
BODY................................................................................................................................................3
CONCLUSION...................................................................................................................................9
REFERENCES...................................................................................................................................10
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INTRODUCTION
The concept of strategy is based on the technique and way to be adopted for getting the things
done. It is based on describing the answers to problems in a broad way but it is less specific
compared to an action plan. A good strategy is considered to focus on all the barriers and
available resources to fulfil a task in a most appropriate way. There are some tools and
techniques designed by different authors and analysts to develop the strategies. These tools are
considered as strategy development tools. This planning is very helpful to organizations to fulfil
their business activities in an effective manner. The planners are benefited with varieties of
tools such as SWOT analysis, PESTLE analysis, Porter’s five force models, scenario planning, etc.
These tools ensure the planners that business plan is meeting with the specific tools. This
report is based on the analysis of different strategy development tools and how they are useful
to organizations in what manner.
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BODY
The strategic development tools are very helpful to organizations in context to gaining more
beneficial outputs for the designed plan. It is very important for the planners to understand
that which tool will be helpful in which context of planning. These tools are helpful in form of
analysing the present state, future perception, financial implication and risky situations. The
most common tools of strategic analysis are V-MOST, SWOT, PESTLE, SOAR, Boston Matrix,
Porter’s Five Forces, Maturity Models and Root Cause Analysis (Lannon, 2016). This report is
based on the brief description of the three most common models and that are SWOT, PESTLE
and Porter’s Five Forces. These are discussed as follows:
[Source: http://www.axisleadership.com/strategic.asp]
SWOT ANALYSIS
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The most commonly used strategic analysis tool is SWOT stands for Strengths, Weaknesses,
Opportunities and Threats. It is considered as the simplest tool for brainstorming procedure.
This tool is focused on both the internal as well as external areas of the organization. Strengths
and weaknesses are helpful in determining the internal capability of the organization. Threats
and opportunities are what organizations can have to form external influencing factors. It is the
responsibility of the team leader to lead its planning group throughout the whole brainstorming
process to cover every aspect and area of the SWOT analysis. Once completed fully, the results
concluded will generate an item list that will be prioritised according to the necessity and oblige
to result as a great input factor for the organizations to achieve the tactics, strategies and
objectives (Moutinho and Phillips, 2018). This tool is helpful in creating a communication
network with the stakeholders to generate different viewpoints and focus only on the key
issues.
[Source: https://www.researchgate.net/figure/Practical-example-of-a-SWOT-analysis-
summary_fig2_304748606]
Strengths of the organizations can result from the internal sources an organization has and
advantages the organization has over the competitors. Weaknesses describe the factors that
are in control of the organization but not in the ability to achieve the competitive edge, areas
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that are in need of the improvement, limited number of resources, etc. Opportunities describe
the positive perception of the organization and the chances organizations have to develop in
the market. Threats are beyond the control of the organization and management and the
situations threatening the marketing efforts (Berry, 2018).
PESTLE ANALYSIS
The PESTLE is a similar approach to that of SWOT analysis and helps the organizations in
determining the different factors that are in support and in oppose to the organizational
development. The acronym for PESTLE is Political, Economic, Social, Technological, Legal and
Environmental. PESTLE analysis is considered to describe the threats and opportunities to an
organization in a much better way than SWOT analysis (Moutinho and Phillips, 2018). The
PESTLE analysis is more helpful in describing the projects that may fail because of the beyond
controllable factors, regional distribution, marketing issues that are in favour of the
organization to achieve the objective.
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[Source: https://blog.essaycorp.com/why-do-a-pestel-analysis/]
It is helpful to marketers to understand the macroeconomic factors affecting the business
performance. Political factors include all the government interventions that are in favour and
against the business development. Economic factors are directly connected to the business
profitability and describe the conditions where how the company will cope up when the
economic recession will hit. The social factors describe the culture and demographic conditions
a business is going to face when it is about to settle in the different region. The technological
factors describe the rapidly changing technology and how its implementation can result in the
development of the organization (SHTAL, et. al. 2018). Legal factors are both internal and
external functioning of the company affecting the operating cost, working and employment
behaviour where the salary and opportunities are provided to every employee with an equal
aspect or not. Environmental factors describe the ecological factors affecting the organization
in form of anything or product or material or process of the organization affecting the nature in
a negative way. The pestle analysis can also reduce PEST and it depends on the size and other
factors of the organization (Jurevicius, 2013).
PORTER’S FIVE FORCE MODEL
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[Source: http://reward4237.gold-time-now35.loan/?
utm_medium=NQ3aDvyuBCtafRQJPeFC66tm%2bMNW8T%2baflxP0d0AJGo%3d&t=main4]
The other most widely used strategy development tool is Porters five forces that are used to
conduct competitive analysis of the competitors within the marketplace. Porter's five forces are
devised by Michael E. Porter of Harvard University. This tool is used by all the companies
whether working on a big or small scale so that the business can work effectively within the
marketplace concerning the competitors along with their strengths and weakness. Porter's Five
Forces analysis is a tool in the business that is used to evaluate the competition. It is based on
the industrial organization's economics to originate five forces that help to evaluate the
intensity of the competition and then understand its attractiveness in context of profitability.
An unattractive industry is one which has negative impacts on the profitability of the company.
The five forces of Porters are measured on the scale of low, average and high depending on the
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impact of force on the business. The five forces of the Porters consist of threats of new
entrants, bargaining power of customers, bargaining power of suppliers, the threat from
existing competitors and threat of substitutes. The threat of new entrants evaluates the
competition that any company can face due to new organization entering the market with
better strategies and marketing tools (Rice, 2018). The threat of substitutes is when product
adopts different techniques in order to try to resolve the same requirement. Such as airlines is a
medium of transportation and its substitute is train, roadways etc. Bargaining power of
customers is explained as the market of output that is the capability of the buyers to put an
organization under pressure that also results in customer's sensitivity to change prices.
Bargaining power of supplier is described as a market of inputs. Suppliers of raw products and
services can lay an impactful stress on the company if there are fewer substitutes for them
(SHTAL, et. al. 2018). Competition from existing competitors is the intensity of the rival from the
competition who already exists in the similar market that can impact on the business activities
as the business market is majorly based on trust and the buyers mostly select the company that
already exists in the market.
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CONCLUSION
This assignment concludes with the strategic development tools that play a significant role in
any business. Also, this report critically evaluates the three mainly used strategic tools that is
SWOT analysis, PESTLE analysis and Porter's Five Forces that helps to understand the macro and
microenvironment in the business world along with the competitive analysis within the
marketplace.
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REFERENCES
 Berry, T., 2018. What Is a SWOT Analysis? [Online available at
https://articles.bplans.com/how-to-perform-swot-analysis/ last accessed 11th April
2018]
 CTB, 2018. Developing Successful Strategies: Planning to Win. [Online available at
https://ctb.ku.edu/en/table-of-contents/structure/strategic-planning/develop-
strategies/main last accessed 11th April 2018]
 Jurevicius, O., 2013. PEST & PESTEL Analysis. [Online available at
https://www.strategicmanagementinsight.com/tools/pest-pestel-analysis.html last
accessed 11th April 2018]
 Lannon, R., 2016. 8 Tools & Techniques To Apply To Strategic Analysis & Planning.
[Online available at https://www.linkedin.com/pulse/8-tools-techniques-apply-strategic-
analysis-planning-richard-lannon last accessed 11th April 2018]
 Marshall, S.J., 2018. Strategic Planning as Sense-Making. In Shaping the University of the
Future (pp. 413-436). Springer, Singapore.
 Mind Tool, 2018. Developing Your Strategy. [Online available at
https://www.mindtools.com/pages/article/developing-strategy.htm last accessed 11th
April 2018]
 Moutinho, L. and Phillips, P., 2018. Strategic analysis. In Contemporary Issues in
Strategic Management (pp. 46-79). Routledge.
 Rice, R., 2018. Micron: Changes for Continued Success.
 SHTAL, T.V., BURIAK, M.M., AMIRBEKULY, Y., UKUBASSOVA, G.S., KASKIN, T.T. and
TOIBOLDINOVA, Z.G., 2018. Methods of analysis of the external environment of business
activities. Revista ESPACIOS, 39(12).
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