HI6006 - Competitive Strategy: An Essay on Strategy Development Tools

This essay provides a comprehensive analysis of key strategy development tools, including SWOT, PESTEL, and Porter's Five Forces. It defines each tool, explains its steps and principles, and provides practical examples of their application in various industries. The SWOT analysis is illustrated with the travel industry, PESTEL with the construction industry, and Five Forces with the agriculture industry. The essay emphasizes the importance of these tools in strategic planning, decision-making, and achieving organizational goals. The document is available on Desklib, a platform offering a wealth of study resources for students.

ASSESSMENT 1
COMPETETIVE STRATEGY
INSTITUTIONAL AFFILIATION(S)
STUDENT NAME
[Pick the date]

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Strategic development is a process in which management of organisation acquire
relevant data and information for desired outcomes. The benefit of strategic development
planning is that it facilitates effectiveness in decisions by selecting tactical option that leads
to elevate the prospect of achieving stakeholder’s objectives and goals (McKay, 2001). There
is no specific tool for strategic planning process, however, principle and steps laid in some of
the strategy development tool help organisations to optimize the value of process. Among
many others, SWOT, PESTLE and Five Force Analysis are the three most utilised strategic
tools which will be discussed in this essay along with providing practical examples of it.
SWOT Analysis
SWOT Analysis can be defined as a process of examining internal strengths and
weaknesses of firms along with finding opportunities and threats present in external
environment. Steps involved in it are collection of primary and secondary data after which
those are analysed. (McKay, 2001)The data collected are sorted under four categories;
weakness, strength, opportunities and threats. Strengths in SWOT analysis refers to those
factors that prompts company’s outstanding performance like assets, projects, quality
improvement, etc. Weakness is those factors that reduces quality of organisation or those
factors that makes overall cost for the company high. Inefficiency in work, poor
communication, lack of financial resources, etc are few factors that generally comprises
weakness of organisation. Opportunities according to SWOT are recognising new initiatives
for growth of the business. Product development, acquisitions and mergers, along with
gaining competitive advantage over competitors are few opportunities according to SWOT.
On the other hand threats are those factors that can give negative effect in organisational
performance. Political and economic instability, budget deficit, threats from competitors, etc
are few threats that make organisations take necessary steps after analysis (Harrison, 2010).
SWOT Analysis of travel industry
With growing airline service around the globe, travel industry has become very significant
and to get connected with passengers have become vital for travel agencies. Preparing SWOT
analysis through strategic development tool will provide assistance to travelling business and
promoting efficient travelling facilities. Strengths related travel agencies are that they can
plan their own act according to the market needs. They are also capable to encourage people

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to visit tourists place in their country by providing extra facilities and convenience. Weakness
lays here is that lack of infrastructure can sometimes affect agencies persona. Also, travel
agencies are restricted to promote tourism facilities in selected regions only. Many new hotel
and restaurants may be unknown to travel agents and thus they lack information by sitting in
one place. Opportunities lies here are that travel agency are capable to flourish by making
partners with other agencies and getting more knowledge of upcoming hotels and public
interest places. Threats lies are economic crisis in the country. Also, lack of information and
facilities does not attract visitors and can discourage them to visit in offered places.
Government also makes fewer investments in these areas which are the reason that travel
companies are unable to flourish (Haseeb, 2015).
PESTEL Analysis
PESTEL is a strategic development tool used for evaluating political, economical,
social, technological, environmental and legal factors related to organisations. It proves to be
an effective tool for considering external environment at initial stage of business (Collins,
n.d.). It identifies external or macro environmental forces that can affect the organisation.
Political factors are those in which government of the country influences organisation like
trade tariffs, fiscal policy, etc. Economic factors relates to impacts by determinants of
economic performances like economic inflation in country, reduced GDP, etc. Social factors
include consideration of social communities and people of the area where project has to be
established. Fourth is technological factor that refers to the amount of innovations that are
present in the market for the organisation along with considering the amount of technology
the company can get involved with. Environmental factors directly relates to surroundings
like climate, geography and weather. Lastly, legal factors accounts laws and regulations of
country like consumer laws, safety standards, etc. (Galea, 2017)
PESTEL Analysis of Construction Industry
Construction projects in every country are unique in nature but all of them require huge
investments. Thus identification of external risk becomes necessary for the construction
companies to take measures in progress. Political instability is one major factor faced by
every construction company as extended projects has to suffer many changes in nation. Any
change in governmental policy affects the business to great extent. Economic factors also

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results difficulty for construction companies as any downfall in economic standard might
reduce the projects value. Supply chain event will also get disturbed if income per capita is
decreased. Any foreign trade investment is highly depended on external analysis for making
investment in the construction company. Any unexpected sociological factor also affects
social environment of Construction Company. Buying trend in more socially active and
holiday staying countries will be more than the ones with socially disturbed countries.
Technological awareness also affects Construction Company’s since they tend to evolve each
day and making regular purchase of new machinery might affect cost turnover of the
company. Legal factors like laws and regulations are also considered while making external
analysis as fixing of project value depends highly upon it. Lastly, environment plays
important role since serene whether can help in producing quality construction as compared
to climatically disturbed country (TRIVEDI, 2016).
Five Force analysis
Porter’s five force analysis is one of the management tools that use industry forces to
determine the strength of competitors of other organisation in similar industry. Threats of
new entrants are one of the forces that recognise rivalries present in the market. If the
company shows profiteering then this threat becomes more as it attracts rivals to enter into
the industry. Other factors that affect new entrants are lack of customer loyalty, no regulation
in government, identical products, etc. Bargain power of suppliers is second factor as this
determines the buying capacity of the firm. If the substitute is larger, this factor becomes
threat as suppliers may switch to them. But if there are many suppliers available, this factor
turns to be opportunity for the company. Bargaining power of buyers is also an important
factor as it shows the power to demand high or less from industry. Lower price results in low
income if bargaining power of buyers is strong. Substitute threat is a force that threatens
companies to great extent as buyer can switch easily from one product to the other whichever
costs little for them along with making comparison of quality. Rivalries among competitors
determines how competitive or profitable the industry is and whether the industrial growth is
possible or not (Jurevicius, 2013).

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Five Forces analysis of agriculture industry
Michael Porter has suggested that to enable competitive market, agribusiness managers must
consider industry forces and performing five force analyses determines ultimate potential in
the industry. According to this tool, new entrants bring fresh capacity and competition for
customers. This threat also depends on entry barrier thus makes difficult for outsides to enter
this industry. Substitute products appears to be different but can satisfy customers needs
many times. For example, switching from wheat to rice is easy and can be done according to
the market value. Bargaining power of suppliers seems to be high if they are few in numbers
wheras if purchasers are less in numbers, suppliers are weak. Bargaining power of buyers
also affects the industry as it can force down the process of crops and play competitors
against each other (Sorrentino et al., 2017). Rivalry among existing firms results in direct
competition in industry. Where competitors are equal in sizes, they slow down the growth of
industry along with reducing selling price of their commodity to compete with each other.
Since the introduction of five force analysis in strategic tools, the future of agriculture
business has perceived taking decisions after measuring external forces without which
sustaining in their industry would not have been easy (Gray et al., 2004).

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References:
Collins, R., n.d. Is There a Better Way To Analyse the Business Environment. [Online]
Available at: http://users.ox.ac.uk/~kell0956/docs/pestleweb_thesis.pdf [Accessed 19 April
2018].
Galea, T.S.a.D., 2017. PEST analysis. [Online] Available at:
https://www.researchgate.net/publication/257303449_PEST_analysis [Accessed 19 April
2018].
Gray, A., Boehlje, M. & Akridge, J., 2004. STRATEGIC POSITIONING IN AGRIBUSINESS:
ANALYSIS AND OPTIONS. [Online] Available at:
https://ageconsearch.umn.edu/bitstream/28666/1/sp040013.pdf [Accessed 19 April 2018].
Harrison, J.P., 2010. STRATEGIC PLANNING AND SWOT ANALYSIS. [Online] Available
at: https://www.ache.org/pdf/secure/gifts/Harrison_Chapter5.pdf [Accessed 19 April 2018].
Haseeb, 2015. SWOT Analysis of Travel Industry. [Online] Available at:
http://marketingdawn.com/swot-analysis-of-travel-industry/ [Accessed 19 April 2018].
Jurevicius, O., 2013. Porter's Five Forces. [Online] Available at:
https://www.strategicmanagementinsight.com/tools/porters-five-forces.html [Accessed 19
April 2018].
McKay, E.G., 2001. STRATEGIC PLANNING: A TEN-STEP GUIDE. [Online] Available at:
https://siteresources.worldbank.org/INTAFRREGTOPTEIA/Resources/mosaica_10_steps.pd
f [Accessed 19 April 2018].
Sorrentino, A., Russo, C. & Cacchiarelli, L., 2017. Strengthening Farmers’ Bargaining
Power in the New CAP. [Online] Available at:
http://centmapress.ilb.uni-bonn.de/ojs/index.php/proceedings/article/viewFile/1713/679
[Accessed 19 April 2018].
TRIVEDI, N.R.a.M.K., 2016. PESTLE TECHNIQUE – A TOOL TO IDENTIFY EXTERNAL
RISKS IN CONSTRUCTION PROJECTSi. [Online] Available at:
https://www.irjet.net/archives/V3/i1/IRJET-V3I165.pdf [Accessed 19 April 2018].