HI6006: Strategy Development Tools - Analysis and Application

This essay provides a comprehensive analysis of key strategy development tools used in business, focusing on SWOT, PESTLE, and Porter's Five Forces models. It explains how these tools help businesses evaluate their competitive environment, minimize competition, and implement strategies for analyzing internal and external factors. The essay details the application of each tool, providing examples such as Amazon's use of SWOT analysis to enhance strengths and opportunities, Nestle Australia's consideration of PESTLE factors, and Aldi's evaluation through Porter's Five Forces. The analysis emphasizes how these tools contribute to strategic planning, competitive advantage, and overall business growth by enabling companies to make informed decisions and adapt to market dynamics.

Running head: Competitive strategy
Competitive strategy

Competitive strategy
There are many tools related to management which is necessary for business
development. The tools help the business to conduct the activities in a smooth manner. The
problems which arise are minimized if the focus is given to these management tools. It is seen
that some of the management tools are SWOT, PESTLE and Porter five force models on which
discussion will be made in this paper. These strategies help to evaluate the competitive
environment and also minimize the competition level prevailing in the market. It is analyzed that
management tools help in implementing the methods to evaluate the business activities. The
internal and external environment analysis is also done by taking into consideration these
management tools.
SWOT Analysis framework
This management tool help to evaluate the strength, weakness, opportunities, and threats
prevailing in the organization. It is used by the business to evaluate the actual performance of the
company. There are many factors that are considered to evaluate the business activities like the
emphasis is given to enhance the strength and opportunities and reducing the threats and
weakness prevailing in the business (Bull et al., 2016). The companies use SWOT analysis at the
time of analyzing the competitors and also to enhance the overall profitability. For instance: It
is seen in Amazon the strength of the company is its brand name and weakness is that the
company is only conducting the activities through an online platform.
1

Competitive strategy
(Source: Smartsheet, 2018).
So, by analyzing these factors the company focuses on the overall growth. Same as with
the opportunities and threats, the opportunity of the company is that it is enhancing the activities
on a global platform. The threat to the company is from the competitors, so SWOT analysis helps
to overcome the competitors.
The tool plays a great role in offering motivation in the business plan so that goals and
objectives can be accomplished effectively. This tool also gives a positive impact on the overall
productivity level of the company (Shabanova e al., 2015).
Like by analyzing the competitors, Amazon focuses on giving discounts to the customers
so that demand can be enhanced in an effective manner of the company. The offers and discounts
are given to the customers so that threat which is prevailing in the market can be minimized.
The strength of the company is the good image in the market and also the large market
share which helps to accomplish goals and objectives of the company. There are many
opportunities that are seen but it require a right time for the company to grab it.
2

Competitive strategy
The company has an opportunity to consider marketing strategies so that demand of the
products can be maximized in the market. By enhancing the demand profits can be easily
achieved which leads to success and growth of the organization.
Pestle Analysis
This is also one of the most important tools considered by the company for development.
This tool helps to analyze the political, economic, social, technological, legal and social factor of
an organization. It helps to analyze the business to explore the laws and economic growth in the
market. It also assists in analyzing the target market by taking into consideration demographic
factor. This tool helps the company to know about the current position and also to enhance the
knowledge of business (Rothaermel, 2015).
For instance
Political factor
It is seen that in Nestle Australia the political factor is to follow the rules and regulations
imposed on export and import of products.
Economic factor
In economic factor, the customers spending pattern is analyzed like the company should
focus on innovation and redesigning of the strategy.
Social factor
In social factor, the company focuses on the values and culture of the society.
Technological factor
In the technological environment, the company will focus on considering the latest
technology so that demand can be enhanced.
Legal factor
3

Competitive strategy
In legal factor rules and regulations are considered by focusing on the policies related to
Australia.
(Source: Mind tools, 2018).
This tool mainly emphasizes on the product specification or at the time of developing the
market plan. It helps the company to analyze the overall market in a proper manner so that
products can be promoted effectively (Yüksel, 2012). It is seen that this tool also help the
company to analyze the opportunities prevailing in the market so that it can be grabbed and
success can be achieved. It is analyzed that by considering this tool it can be easy for the
company to focus on each and every factor. If emphasis is given on every factor then it can be
seen that large market share can be grabbed easily.
This tool is also useful in analyzing the target market by emphasizing on the age group
and growth of the population. It is seen that it also assit in making plans so that threats that are
prevailing in the business can be minimized. Proper understanding of the business is also be done
by giving focus on Pestle analysis. Pestle helps to motivate employees by considering the
strategies that will help to enhance the growth in the market (Gupta, 2013).
4

Competitive strategy
Five force analysis
Five force analyses take into consideration five factors like rivalry against the
competitors, threat of new entrants, the power of suppliers, the power of buyers and threat of
substitute. This tool helps the company to analyze the actual position in the market. So, to
enhance the overall performance the company focuses on these five factors. This tool evaluates
the business opportunities by considering the value of the company (E. Dobbs, 2014).
Also, it emphasizes on the steps to enhance the changes in the market. Five force
analyses focus on creating effective plans and also help to induce the customer to purchase the
products from the company. They are used by the sales and top management team to evaluate the
actual position in the market and planning of strategies is done so that large market share can be
grabbed (Grant, 2016).
(Source: Porter five force analysis, 2018).
For example:
Industry Rivalry
5

Competitive strategy
In Aldi, if rivalry against the competitors is taken into consideration than it is seen that it
is high in the grocery sector and also the large share market is taken by Coles.
Threat of substitute
If the threat of substitute is considered then it is seen that it is also high because there are
many substitutes available for the same product.
Power of suppliers
If Power of suppliers is considered then it is seen that it is low due to many websites
available for the products.
Power of buyers
If the power of buyer is considered then it is seen that customer preference is changing
with time.
Threats of new entrants
If threats of new entrants are considered then there are many companies like Tesco who
face a high level of competition. These factors assist the company to analyze the situations that
give impact on the overall profitability of the company (Johnson, 2016).
So, it is concluded that to achieve the growth in the market, it is important for the
company to consider these tools so that activities can be conducted smoothly. Also, these tools
help to gather the information about the market so that process of the business can be created
easily. These tools enhance the overall profits of the company and also enhance the customer's
satisfaction level. It is seen that strategic analysis is important for every organization so that
goals and objectives can be achieved easily.
6

Competitive strategy
References
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.
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
7

Competitive strategy
Gupta, A., 2013. Environmental and pest analysis: An approach to external business
environment. Merit Research Journal of Art, Social Science and Humanities, 1(2), pp.13-17.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Porter five force analysis., 2018. Research gate. [Online]. Available at:
https://www.researchgate.net/figure/The-Porters-Five-Forces-10-The-Porters-Five-Forces-
model-is-used-to-analyze-competitive_fig4_308611478. [Accessed on 19 April, 2018].
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Shabanova, L.B., Ismagilova, G.N., Salimov, L.N. and Akhmadeev, M.G., 2015. PEST-Analysis
and SWOT-Analysis as the most important tools to strengthen the competitive advantages of
commercial enterprises. Mediterranean Journal of Social Sciences, 6(3), p.705.
Yüksel, İ., 2012. Developing a multi-criteria decision making model for PESTEL
analysis. International Journal of Business and Management, 7(24), p.52.
8