Strategy Development Tools: RBV, PESTLE, and Porter's Five Forces

This essay delves into the realm of strategic development tools, focusing on Resource-Based View (RBV), PESTLE analysis, and Porter's Five Forces. It explains how companies utilize these tools to assess their internal and external environments, aiming to achieve a competitive edge. The essay provides in-depth explanations of each tool, supported by real-world examples. The RBV is illustrated through Toyota's strategic choices, highlighting how it leverages internal resources to differentiate itself. PESTLE analysis is exemplified by Nike, showing how the company navigates political, economic, social, technological, legal, and environmental factors. Porter's Five Forces model is applied to Delta Airlines, analyzing the competitive dynamics within the airline industry. The essay emphasizes the importance of these tools in making informed business decisions, managing risks, and pursuing sustainable growth and profitability. References are included to support the information provided.

Competitive strategy

Competitive strategy
Strategy tools
There are various strategy development tools that are used by the companies in the present era.
By considering these tools, the management emphasizes on controlling the entire business
operations. In this paper, the discussion will be made on three strategy development tools which
assist the companies in accomplishing the set goals and objectives. The tools on which the
discussion will be made are Resource based view, PESTLE analysis and Porter five force
models. It is examined that strategic planning is essential for the company as it provides direction
to manage the routine activities and also analyzes the progress and changing approach to move
forward among the competitors present in the market.
Resource based view
The resource based view is considered as the tool that emphasizes on the internal environment of
company. It is an approach that assists in attaining competitive advantage that emerged in 1980s
and 1990s. RBV model has a major role in assisting the organization to accomplish the
organizational performance. This model emphasizes on two types of resources such as tangible
and intangible. There are various tangible assets such as land, buildings and machinery and there
are also intangible assets which are not physical presence but it can be owned by the company.
The intangible assets of the company are brand reputation and trademarks. Resource based view
evaluates and interprets the internal resources of the organization and focuses on resources and
capabilities at the time of formulating the strategy to attain sustainable competitive advantage
(Lioukas, Reuer and Zollo, 2016).
Resources can be known as inputs that enable the companies to control the functions. Internal
resources and capabilities helps to make the strategic choices that are made by the companies at
the time of competing in the external business world. Competitive advantage takes place only
when there is situation of resource heterogeneity and resource immobility. It can be said that this
tool is useful for the companies in maintaining their brand image and resources in the large
market area. RBV is also the tool that assists in boost the performance and this tool also shows
the right direction to be considered by the management. It is important for the companies to
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Competitive strategy
emphasize on keeping their eye on the resources assist in giving tough competition to the other
competitors present in the market (Kellermanns et al., 2016).
Example of Toyota
Toyota utilizes its resources and capabilities by differentiating itself from the competitors present
such as General Motors. The company has also build good brand image among the customers
and due to this value creating among the customers has been boosted. Toyota also emphasized on
the lean production system which is difficult to be imitated and assimilated. Lean production
system has helped the company in attaining efficiency and also consistency in offering products
at low cost. The high tech performance features has considered by the company to compete with
the luxury car competitors. Toyota hybrid cars have created the new markets that has added
value for the customers. But on the other hand, there are many competitors who are putting their
best efforts to achieve success in relation to Toyota. Therefore, it can be stated that by focusing
on RBV tool the company has enhanced the customer base and also focused on attaining growth
among the competitors present in the market (Sodhi, 2015).
Pestle analysis
One of the famous strategy developmental tools is Pestle analysis which is used by the
companies to control the external environment. It is considered as the analytical tool that is
considered by the firms with the aim of planning the operations. This is also known as the
strategic framework that influences the operations of the business on external level. There are
various macro environment aspects that affect the strategic planning such as new rules, change in
tax policies and also the trade barriers (Jarzabkowski and Kaplan, 2015). By having in-depth
knowledge of the external environment, the organizations can boost the opportunities and
minimize the threats in the company. In this tool there are six factors such as political, economic,
legal, social, technological and environmental and these factors assist in controlling the business
operations (Shabanova et al., 2015).
Example of Nike
In the market of US, the organization has to emphasize on the low interest rates as it assist in
maintaining the large market share. At the time of selling the products, Nike focuses on the tax
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Competitive strategy
and manufacturing laws. In relation to the economic factor, it is analyzed that in the Eastern
countries the revenue of the organization depends on the low cost of labor. Also, Nike has the
sufficient resources that chased the small emerging markets. In the present era, the society is
more conscious about health so the organization is emphasizing towards controlling the process
of production (O'brien, 2015).
Technological factor assist the company to promote the products in the market via social media
channels and also with the latest technologies that boost the production of the company. Legal
repercussions are also taken into consideration by Nike in relation to the marketing practices that
involve fake discounts. Environmental factor is also taken into consideration in which the
company promised to manage the current practices that assist to resolve the problems in relation
to polluting rivers. Therefore, it can be said that pestle analysis tool is considered by the Nike
Company that assist in controlling the routine functions of the business (O'brien, 2015).
Porter five force analysis
This model is known as the powerful tool that assists to have proper understanding of the
competition present in the business world. It assists in searching the potential of the organization
in the market. Porter five force factors are considered as important for the organization to
consider as it also affects the overall profits of the company. Michael Porter has given this tool
that assist to analyze the attractiveness of the industry and also the profits. Porter said that the
organizations should focus on the keeping the close eye on the competitors and should evaluate
the aspects that impact the business operations. In this model, there are five aspects which are
used by the organizations such as Competitive rivalry, buyer power, threat of substitution,
supplier power and threat of new entry. (Koks and Kilika, 2016). So, these are the factors that are
used to maintain the attractiveness of the business.
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Figure 1
(Source: Visual paradigm, 2018).
Example of Delta Airlines
In the airline sector, the competition level is high which affects the overall business operations.
Delta airlines also face huge competition from the different organizations such as South West
and Jet Blue. The competition level is high as the organizations offer the similar types of services
and customers are attracted towards the services that are less in cost. Delta Airline manages the
high competition by emphasizing on the marketing campaigns that enhance the brand image
among the customers. The bargaining power of the buyer is high as organization provides the
chance to book the flights directly. The buyers have the wide choice to select from the different
competitors present in the similar sector (Porter and Heppelmann, 2014).
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Competitive strategy
Threat of new entrants is low as it can be analyzed that to enter into the airline sector is tough as
it requires huge financial stability. Therefore, it is not easy for the organizations to enter into the
airline sector easily. Supplier power is strong as the organization have strong incentive scheme to
maintain the relations. In this market, it creates difficulty for the suppliers to be replaced. The
last is threat of substitutes which is high as there are many firms who are offering similar
services in the market. So, customers have the chance to substitute the services easily with the
other companies offering the similar services.
By analyzing the essay, it can be concluded that strategic development tools has an essential role
in managing the routine functions. It gives the option to maintain the competitiveness among
different competitors present in the market. These tools provide proper analysis of the external
and internal factors that impacts the overall growth and profitability. Therefore, it can be said
that these tools are necessary to be considered by the companies as it minimize the risks and also
boost the chance of achieving growth and objectives in the business world.
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References
Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools‐in‐use: A framework for understanding
“technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.
Kellermanns, F., Walter, J., Crook, T.R., Kemmerer, B. and Narayanan, V., 2016. The resource‐
based view in entrepreneurship: A content‐analytical comparison of researchers' and
entrepreneurs' views. Journal of Small Business Management, 54(1), pp.26-48.
Koks, S.C. and Kilika, J.M., 2016. Towards a Theoretical Model Relating Product Development
Strategy, Market Adoption and Firm Performance: A Research Agenda. Journal of Management
and Strategy, 7(1), p.90.
Lioukas, C.S., Reuer, J.J. and Zollo, M., 2016. Effects of information technology capabilities on
strategic alliances: Implications for the resource‐based view. Journal of Management
Studies, 53(2), pp.161-183.
O'brien, J., 2015. Category management in purchasing: A strategic approach to maximize
business profitability. Kogan Page Publishers.
Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming
competition. Harvard business review, 92(11), pp.64-88.
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.
Sodhi, M.S., 2015. Conceptualizing social responsibility in operations via stakeholder resource‐
based view. Production and Operations Management, 24(9), pp.1375-1389.
Visual paradigm. Five force analysis. [Online]. Available at: https://www.visual-
paradigm.com/guide/strategic-analysis/what-is-five-forces-analysis/. [Accessed on13 December,
2018].
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