HI6006 Competitive Strategy: Analyzing Key Strategy Development Tools

This essay provides a comprehensive analysis of three key strategic tools: PESTEL analysis, SWOT analysis, and Porter's Five Forces. It begins by introducing the importance of strategic analysis in the competitive business landscape, emphasizing the need for tools to understand the market environment and predict opportunities. The essay then delves into PESTEL analysis, examining political, economic, social, technological, environmental, and legal factors, with a specific focus on how these factors influence a company like Apple Inc. The SWOT analysis is then presented, evaluating the internal strengths and weaknesses of a business, and identifying external opportunities and threats, again using Apple as an example. Finally, Porter's Five Forces framework is explored, detailing competitive rivalry, the bargaining power of buyers and suppliers, the threat of new entrants, and the threat of substitute products. The analysis highlights how these forces shape an industry's competitiveness and impact a company's profitability. The essay concludes by reiterating the significance of these strategic tools for businesses, particularly in market evaluation and decision-making, and provides a bibliography of cited sources.

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Competitive Strategy
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Introduction
Some several tools and techniques are used in the business world to make the best
strategic analysis and planning. These tools enable the business to understand the environment in
which they operate and come up with plans on how to best maximize their operations in that
particular environment. These strategic analysis tools help the best to tackle the unseen and
evade any possible challenges that the business may face from the markets. Additionally, these
tools enable the business to predict new opportunities that may be existing in the market. With
the ever-competitive and dynamic market, without robust strategies, the companies will not be
able to survive. Every business exists in the face of competition and the right strategy analysis
tools will enable the business to stay afloat. Among the common strategic tools include PESTLE
analysis, SWOT analysis, and Porter’s five forces. The tools evaluate both the internal and
external market environment that enables the business to understand the environment in which it
operates
PESTEL analysis
This tool is used to analyze the external environmental factors of a business. The tool is
purposely useful when starting a new business or venturing into new markets. This tool is
additionally used in collaboration with other tools such as SWOT analysis and Porter’s five
forces. PESTEL is acronym for Political, Economic, Social, Technological, Environmental, and
Legal factors (Peralta and Viltard, 2015, pp.500). These factors will be analyzed below
concerning how a business has made use of them to venture into new opportunities.

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Political
These deal with the extent or the degree in which the government takes part in the
economy of a certain country. It covers all the influence that a government has on the operations
of a business. Some of the political factors may include political stability or instability, tax
policy, foreign trade policy, environmental law, labor law, corruption, and trade restrictions.
These factors have to be taken into considerations by the entrepreneur in the process of analyzing
the potential and attractiveness of the market. The political factors of Apple Inc. mainly present
opportunities for multinational corporations. Some of the factors that affect Apple operations
include trade disputes and the improvement of free trade policies. For instance, the ever-
increasing tension and trade bans between the U.S and China serve as a threat to the company.
This is because most production factories for Apple are based in China. In contrast, the stable
political atmosphere in the developed countries serves as an opportunity for Apple to increase its
market share.
Economic
These factors determine the performance of the economy in certain interest rates,
unemployment rates. They include; economic growth, exchange rates, and the disposable income
of the consumers’ region. Economic factors mainly affect the purchasing power of the consumers
and can, therefore, alter the demand or supply (Ho, 2014, pp.6480). For the case of Apple, the
increase of disposable income among the target consumers and the rapid growth of developing
companies serve as opportunities for the company. The high disposable income creates a new
market niche for the company to promote its premium products.

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Social
The social factors represent the norms, customs, and values of the demographics in which
the business operates. They may include population trends, income distribution, age, lifestyle,
attitudes, and growth rate. These factors assist promoters when doing marketing analysis and
positioning. They also enable the company to create a working awareness campaign (Bagheri,
2016, pp.435). Some of the social factors that affect the operations of Apple include the rise in
the use of smartphones and the international anti-Apple campaign. The rise of internet
connectivity and dependence on smartphones serves as an opportunity for Apple to expand its
market. The Anti-apple sentiments serve as a threat to the company. This includes the lawsuits
that Apple has previously filed against its competitors.
Technological
Technological factors entail the rise in innovations and how digitization and globalization
may affect the operations of a business. They may include research and development,
automation, technological change and creating technological awareness in the market. The
technological factors for Apple Inc. generally provide opportunities for the company (Takata,
2016, pp.5618). Factors such as the ever-growing need for cloud computing, the increase in
technological integration in businesses and the growing mobile market allow the company to
expand.

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Environmental factors.
These factors include ecological and environmental awareness. Climate change and the
need to shift to renewable energy sources that are sustainable effect the operations of businesses
all over the world. Businesses are increasingly being compelled to engage in corporate social
responsibilities and sustainability practices. Apple is increasingly channeling its product to be
more energy efficient to address this.
Legal
These factors include specific laws including antitrust laws, consumer protection laws,
employment laws, and copyright and patent laws. Companies, therefore, must understand what is
legal or not in order not to infringe on these laws. Apple has overtime been faced with legal
conundrums including privacy regulations and infringement of its patent. These factors incur
costs to the company including regulatory compliance requirements.
SWOT analysis.
SWOT stands for Strengths, Weakness, Opportunities, and Threats. This analysis is used
by businesses to evaluate the internal and external environment in which a business operates. this
analysis tool is used to derive a realistic and fact-based evaluation of the organization (Bull, et
al., 2016, pp.102). An organization should use SWOT analysis as a guide and not essentially a
prescription for business performance.
Strength
It describes the features in which the organization excels at giving it an advantage over
the competition. For example, Apple Inc. has a variety of products in its portfolio that include

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iPhones, iMac, iPod, Apple TV, iPad, and Apple watch (Khan, Alam, and Alam, 2015, pp.960).
These diversifications in the portfolio enable the company to expand its revenue. Additionally,
Apple has a strong brand image and a loyal customer base.
Weakness
This factor limits an organization from operating optimally. It includes areas where the
business ought to improve. For the case of Apple, the company has a niche market since they
target high-class consumers due to their high pricing (Phadermrod, Crowder and Wills, 2019,
pp.200). Their devices also have limitations in terms of connectivity with devices from other
brands. Their operating system is closed for customization.
Opportunities
This is an external factor that can give a business a competitive advantage. The high
demand for smartphones opens a huge market for Apple to develop new products. additionally,
Apple can diversify its distribution network to acquire more sales.
Threats
These are external factors that can disrupt the operations of an organization. Apple faces
the threats of new competitors entering the market. These competitors like One Plus, Oppo and
Xiaomi are offering premium phones at affordable prices. Similarly, imitation is another threat
the company has been grappling with for ages. When the company launches a new product, a
replica is produced to the market hence the presence of so many counterfeits that affect the sales
of the company products.

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Porter’s five forces
This strategic tool identifies the competitive forces that shape the operating industry of a
business and help to evaluate the strength or weakness of that particular industry (Zott and Amit,
2013, pp.410). This tool helps the business to determine its competitiveness and enhance the
profitability of the company. These forces are;
Competition rivalry
This refers to the existing businesses that offer the same goods or services as the
company. The presence of many competitors undercuts the ability of the company to be more
profitable (Kumar, P, Dass and Kumar, 2015, pp.470). When competitive rivalry is low, the
company can achieve higher profit margins. For the case of Apple, the company faces stiff
competition from other manufacturers such as Samsung, Huawei, Sony, Oppo, and Hewlett-
Packard.
Bargaining power of the buyer
This is the ability of the consumer to drive the prices of the business. When a business
has a small and powerful clientele, they can negotiate for better deals and low prices. In contrast,
when the business has an independent and a large client base, it might manipulate the prices to its
favor. For Apple, the individual bargaining power of a buyer is weak but the collective
bargaining power of its customers is a strong force (Amrollahi and Akhgar, 2013, pp.162).
However, the company has invested in research and development to counter this. For instance,
the company recently launched the iPhone SE 2whcich is priced at 399 US dollars making it the
first low priced iPhone.

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Bargaining power of suppliers.
When there are few suppliers in the industry, the company will depend on them more.
Consequently, the supplier has the power to push up input costs and gain trade advantages
(Wright, Paroutis and Blettner, 2013, pp.100). On the other hand, many suppliers in the market
result in low switching costs by companies making the business able to enhance its revenues.
Apple has a large number of suppliers to choose from making them able to negotiate the best
deals.
The threat of new entrants
This factor deals with the ability of the new business to encroach a market. When it cost
less for a new competitor to enter a market and be effective, the established business will be
affected. In contrast, in an industry with strong barriers to new entrants, the business will be able
to thrive (Wouters, 2014, pp.40). For Apple, it cost more for a new set up to enter the market.
The threat of substitute product
The businesses that produce goods that have no substitutes have the advantage of
controlling the prices. When the substitutes exist, the customers can forego the products for the
available options. For the case of Apple, most of the available substitute products have limited
capabilities as compared to Apple products.
Conclusion
In conclusion, the strategic analysis tools are necessary to market evaluation system to
facilitate the profitability of a business in any market. These tools enable startups and novice
business to evaluate critically new markets before they venture into them. PESTEL analysis

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looks into some of the external environmental features that may affect the performance of the
business. A SWOT analysis focuses on some internal and external factors. It analyses how the
strengths give the business an edge while the weakness affects the performance of the business.
Porter’s five forces analyze the industrial market place to enable the business to make informed
decisions.

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Bibliography
Amrollahi, A. and Akhgar, B., 2013. Analyzing open source business with Porter's five
forces. International Journal of Computer Theory and Engineering, 5(1), p.162.
Bagheri, J., 2016. Overlaps between human resources’ strategic planning and strategic
management tools in public organizations. Procedia-Social and Behavioral Sciences, 230,
pp.430-438.
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.
Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European
academic research, 2(5), pp.6478-6492.
Khan, U.A., Alam, M.N. and Alam, S., 2015. A critical analysis of internal and external
environment of Apple Inc. International Journal of Economics, Commerce and
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Kumar, P., Dass, M. and Kumar, S., 2015. From competitive advantage to nodal advantage:
Ecosystem structure and the new five forces that affect prosperity. Business Horizons, 58(4),
pp.469-481.
Peralta, D.H.Á. and Viltard, L.A., 2015. Simple strategic analysis tools at SMEs in
Ecuador. Independent Journal of Management & Production, 6(2), pp.495-524.

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Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management, 44, pp.194-203.
Takata, H., 2016. Effects of industry forces, market orientation, and marketing capabilities on
business performance: An empirical analysis of Japanese manufacturers from 2009 to
2011. Journal of Business Research, 69(12), pp.5611-5619.
Wouters, A., 2014. Apple & Google: a comparative analysis of marketing approaches and
strategies. Czech Journal of Social Sciences Business and Economics, (4), pp.31-43.
Wright, R.P., Paroutis, S.E. and Blettner, D.P., 2013. How useful are the strategic tools we teach
in business schools?. Journal of Management Studies, 50(1), pp.92-125.
Zott, C. and Amit, R., 2013. The business model: A theoretically anchored robust construct for
strategic analysis. Strategic Organization, 11(4), pp.403-411.