HI6006 - Strategic Analysis: PESTEL, Porter's 5F & RBV in Business

This essay provides a comprehensive overview of strategy development tools, focusing on PESTEL analysis, Porter's Five Forces model, and the Resource-Based View (RBV). It explores how these tools are applied in business strategy, offering insights into their benefits and limitations. The essay likely includes practical examples and academic references to support its analysis, demonstrating how businesses can leverage these frameworks for strategic decision-making. The discussion covers the key components of each tool, such as the political, economic, social, technological, environmental, and legal factors in PESTEL, the competitive forces in Porter's model, and the internal resources and capabilities in RBV. The analysis aims to equip readers with a solid understanding of these tools and their application in real-world business scenarios.

ABSTRACT
The apex of environmental scanning with regard to competition can only be found in Porter’s Five
Forces model. This is a long side External environment scanning tools such as Strengths, Weaknesses,
Opportunities and Threats (SWOT) analysis and Political, Economic, Social, Technological, Environmental
and Legal (PESTEL) analysis and calculate its coping with competition, how to retain or increase a
company’s market share among others. This requires accurate competitive analysis in the face of these
complexities. This may adversely affect the application and continued use of the five forces in Kenya.
This study was an assessment of the application of Porter’s Five forces model of competitive analysis
amidst the rapidly changing environment in the Kenyan Banking industry. The problem in this study was
that the failure to use and under-utilisation of the five forces by banks has led to poor performance. The
purpose of the study was to assess the application of the five forces model in terms of its benefits and
limitations, and how it can be modified to cope with the Kenyan banking industry. This study would be
of great significance in enriching the body of knowledge on Porter’s five forces model and providing a
meaningful and contextual evaluation of the Kenyan banking industry consequently coming up with
useful insights. A descriptive survey design was used and a triangulation of both quantitative and
qualitative methods. A sample of 62 respondents was randomly selected from the stratified target
population of top, middle and operational level managers in Cooperative Bank of Kenya and given
questionnaires. The data was analyzed both qualitatively and quantitatively and processed through
computer (SPSS) with special emphasis on the facts and emerging themes that addressed the research
questions and the resulting correlation and regression analyses results presented, discussed and
interpreted. This was a mixed methodology of descriptive and inferential statistics to establish the
existing relationships between the independent and dependent variables. Based on the findings, this
study concludes that there is a strong positive relationship shown by R value of 0.8 between Porter’s
Five Forces model and the performance of Cooperative Bank of Kenya. It also concludes that the
strength and effects of substitutes should not be ignored; competitors are significant in benchmarking,
keeping the management on toes and increasing efficiency and effectiveness thus aiding in success and
achievement of competitive edge through innovation; the Bargaining power of buyers within the
banking industry is critical in terms of understanding the bank’s buyers and successfully meeting their
demands as a way of retaining them and achieving high customer satisfaction for repeat sales; the
Bargaining power of sellers apply to the banking industry was a factor to watch as increase in the cost of
their services leads to an increase in the cost of services offered by Cooperative Bank and the quality of
their services also such as assured security and clean working environment determines employee
motivation and satisfaction. Threat of new entrants was found to apply to the banking industry and
needed mitigation measures as stated in the recommendations of the study.