HI6006 - Competitive Strategy: Key Strategy Development Tools Analysis

This essay provides a comprehensive discussion of key strategy development tools used in the modern business world, including PESTEL analysis, SWOT analysis, Porter's Five Forces, and Generic Strategies. It analyzes the application of these tools with real-life examples, such as Zara, to illustrate their use in evaluating the business environment. The essay covers how PESTEL analysis helps understand political, economic, social, technological, environmental, and legal factors; how SWOT analysis identifies strengths, weaknesses, opportunities, and threats; how Porter's Five Forces assesses competitive intensity; and how Generic Strategies contribute to achieving competitive advantage through cost leadership, differentiation, and focus. The analysis demonstrates how these tools enable organizations to make informed decisions and improve their strategic positioning in the market.

Running head: COMPETITIVE STRATEGY
Competitive Strategy
Name of the Student
Name of the University
Author Note

1COMPETITIVE STRATEGY
The paper discusses regarding the various strategic tools that are widely used in the
modern business world for the effective evaluation of the business environment. The paper
analyses the application of the tools such as the PESTEL analysis, SWOT analysis, Generic
Strategies and Five Forces analysis. The analysis of the application of the tools includes
examples of the real life organizations for the better understanding of the application of the
tools in the effective evaluation of the business environment that surrounds a particular
organization.

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PESTEL Analysis:
The PESTEL Analysis tool is significantly crucial for the managers of the modern
business organizations in achieving the knowledge regarding the political impact on a
particular organization and adding to that it also enables a company to gain the insights
regarding the effect of the society along with the legal framework of a region on the business
operations of a company. Apart from this, the tool plays a crucial role for the decision makers
of the organization in obtaining the knowledge regarding the scope of introducing modern
technology in the products and the services of the company with an accurate evaluation of the
acceptance of the technology amongst the customers of the destination region (Sohel,
Rahman and Uddin 2014). In addition to this, the tool helps in the evaluation of the economic
condition of the organization as well.
Considering the example of Zara, the tool helps the managers of the organization in
achieving the idea of the impact of the scope of Foreign Direct Investment in a particular
nation along with the ease in the business conduction that is expected to be experienced in
that nation. In addition to this, the tool helps the company to identify the appropriateness of
their pricing policy with a precise focus on the economic factors such as the inflation rate,
GDP or the growth rate of the economy of that selected nation. Apart from this, the tool is
significantly important in the evaluation of the socio-cultural factors that have the potential to
affect the business operations of the selected organization (Choez et al. 2015). In addition to
this, the evaluation of the scope of incorporating modern technology in the products of the
selected organisations or the impact of the tax or human resource regulations on the business
operations of the selected organization are noteworthy contribution of the above mentioned
tool.

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SWOT Analysis:
The SWOT Analysis evaluates the internal environment of a selected organization.
The tool is widely used by the managers of the organizations in order to identify the
strengths, weakness, threats and the opportunities for a particular organization in the modern
business context (Cortez et al. 2014). The tool helps the business organizations in a better
understanding of their business strategies and provides the scope to identify the factors that
they needs to be taken care in order to improve their business operations.
With a precise focus on Zara, the tool plays a key role for the managers of the
organization in identifying the strengths of the organization such as significant presence of
the organization with more than 2000 number of stores across the world, the low cost and
efficient management of the supply chain networks of the selected organization along with
the capability of the organization in designing their products in accordance to the preferences
of the requirements of the customers (Zara.com. 2019). Adding to this, the tool is of great
significance in identifying the weakness of the selected organization such as the limited
occurrence of the marketing and the promotional activities, in identifying the threats such as
the considerable amount of consumer switching, the detrimental impact of the economic
downturn along with the impact of the high end fashion merchandises (Machmud and
Sidharta 2014). Apart from this, the identification of the significant opportunities for Zara in
the global market of fashion retail, the lucrative scope of the business expansions and
possibility of increasing the online marketing and the online business conduction will be
important contribution of the above mentioned tool.

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Porter’s Five Forces:
The Porter’s five forces tool enables the managers of the organizations to gain the
knowledge regarding the impact of the competition on the business operations of a chosen
company. Adding to this, the tool is significantly essential for the managers in achieving the
knowledge regarding the bargaining power of the buyers and the suppliers in the business
operations of a particular organization (Sandberg 2013). Apart from this, it also provides
important information regarding the threats of the new entries for a selected organization.
Considering the business operations of Zara, the tool is significantly efficient in
providing the information regarding the level of competition that the mentioned organization
faces from the competitor organizations such as Burberry, Gucci, Hugo Boss or Hermes
International. The tool also helps the managers in identifying the parameters of the
competition such as the quality of the products, the pricing of the products, the reputation of
the organization or the quality in the services of the employees of the organization. Apart
from this, the tool plays a key role for the managers of the organization in identifying the
factors that can increase the vulnerability of the organization when it is competing with a new
organization. Apart from this, the impact of the buyers which includes the identification of
the number of suitable organizations available for the customers to choose from or the
number organizations that are available for the customers capable of selling the products at a
lower price compared to the selected organization is one of the notable contribution of the
tool (Progress, Whilhemia and Tarisai 2013). Apart from this, the impact of the suppliers on
the business operations of Zara which includes the assessment of the number of supplier
organizations for the company capable providing quality materials, capable of supplying the
materials within the deadlines, capable of producing the materials at the best price possible,
can be evaluated with the application of the tool.

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Generic Strategies:
The Porter’s generic strategies are used by the decision makers of the organizations
for the effective evaluation of the contribution of the strategies in gaining the competitive
advantage in modern business context (Rajasekar and Al Raee 2013). The generic strategies
include the cost leadership differentiation and focus strategy.
Considering the example of Zara, the generic strategies are notably helpful for the
managers of the selected organization in the effective identification of the factors that
contribute to the processing of the products at cheaper rates such as the efficient sourcing of
the materials at a comparatively low cost along with the effective management of the
operational cost of the organization (Cortez et al. 2014). Apart from this, the tool is of great
significance for the managers of the organization in identifying the scope of managing the
distribution cost of their products which has the potential to enable the organization in
introducing low priced products.
Apart from this, the tool helps the organization to evaluate the capability of
introducing diversified products and with the increasing urge of the organization in achieving
the preferences and different requirements of the customers through the design of their
products and the services, the company has the potential to implement the differentiation
strategy. The company is able to establish a significantly efficient customer interaction
mechanism which helps it to produce the products in accordance to the preferences of the
customers which makes the products of the selected organization unique in comparison to the
competitor organizations (Zara.com. 2019). Hence it is pretty evident that the company has
the potential to gain significant amount of competitive advantage with the accurate
implementation of the above mentioned strategies.

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References:
Choez, W.O., Cortázar, M.Q., Cruz, S.H. and Carvache, K.R., 2015. A framework for PEST
analysis based on neutrosophic cognitive map: case study in a vertical farming initiative.
Neutrosophic Sets and Systems, vol. 17/2017: A Quarterly International Journal in
Information Science and Engineering, 2(4), p.57.
Cortez, M.A., Tu, N.T., Van Anh, D., Ng, B.Z. and Vegafria, E., 2014. Fast fashion
quadrangle: An analysis. Academy of Marketing Studies Journal, 18(1), p.1.
Machmud, S. and Sidharta, I., 2014. Business models for SMEs in Bandung: Swot analysis.
Jurnal Ekonomi, Bisnis & Entrepreneurship, 8(1), pp.51-61.
Progress, H., Whilhemia, S. and Tarisai, C., 2013. The Delineation of Porter’s Five
Competitive Forces Model from a Technological Marketing Perspective: A Case Study of
Buffalo City Metropolitan Municipality. Journal of Economics, 4(2), pp.169-182.
Rajasekar, J. and Al Raee, M., 2013. An analysis of the telecommunication industry in the
Sultanate of Oman using Michael Porter's competitive strategy model. Competitiveness
Review: An International Business Journal, 23(3), pp.234-259.
Sandberg, E., 2013. Understanding logistics-based competition in retail–a business model
approach. International Journal of Retail & Distribution Management, 41(3), pp.176-188.
Sohel, S.M., Rahman, A.M.A. and Uddin, M.A., 2014. Competitive profile matrix (CPM) as
a competitors’ analysis tool: a theoretical perspective. International Journal of Human
Potential Development, 3(1), pp.40-47.
Zara.com. 2019. ZARA Official Website. [online] Available at: https://www.zara.com/