Strategic Management Models: SWOT, PESTLE, Porter's Framework

This essay delves into the core concepts of strategic management, exploring how organizations evaluate their business environment to ensure smooth market operations. The essay focuses on three key strategic tools: SWOT Analysis, PESTLE Analysis, and Porter’s Five Forces Framework. It uses Wesfarmers, an Australian conglomerate, as a case study to examine its internal and external environments. The essay explains how SWOT analysis helps identify strengths, weaknesses, opportunities, and threats; how PESTLE analysis assesses macro-environmental factors like political, economic, social, technological, legal, and environmental influences; and how Porter’s Five Forces Framework evaluates competitive positions within an industry. The conclusion emphasizes the benefits of these strategic management tools in helping companies analyze their business environments and make informed decisions for achieving higher market success. The report is supported by academic journals and practical examples from the industry.

Competitive Strategy

Competitive Strategy 1
Strategic Management is the procedure of evaluating the business environment of the company.
It is required for an organization to evaluate the internal and external environment of the
business to operate smoothly in the market. There are numerous tools that are used to analyses
the factors that affect the growth of the company such as Porter’s Five Forces Framework,
PESTLE Analysis, Value Chain Analysis, SWOT Analysis and the others (Ansoff, Kipley,
Lewis, Helm-Stevens, and Ansoff, 2018). The report is based on the topic “strategic
management models”. However, there are numerous strategic tools but in this report, SWOT
Analysis, PESTLE Analysis, and Porter’s Five Forces Framework will be discussed. In this
report, Wesfarmers has been taken into consideration to examine the macro or micro
environment. Wesfarmers is an Australian conglomerate firm which provides the fertilizers,
chemicals, coal mining and industrial safety products. It works in two countries such as New
Zealand and Australia (Wesfarmers, 2018a).
SWOT Analysis is a strategic planning technique which is used by the organization to identify
the strength, weaknesses, opportunities and threats. It also helps to determine the competitive
position of the company to develop the strategic planning. It is a technique for assessing the
competition, risk, performance, and potential of a business. This tool is used to evaluate or
examine the external or internal factors. This strategic tool is used by the company to evaluate
the position in the market. This tool is used by the investors or competitors to evaluate the
position of the company. This tool also used by the organization to identify the areas in which it
has to improve or the areas where it can grasp the opportunities to gain the advantage.
Strength: It states the capability or ability of the company. It has been seen that the brand image
of Wesfarmers is high in the Australian market. The business has large number of shareholders

Competitive Strategy 2
500000 and also has 20000 people that help to operate effectively or efficiently smoothly
(Wesfarmers, 2019b).
Weaknesses: It states the area where the organization has to improve. Wesfarmers operates in
limited areas in terms of geographical as the organization operates in two countries such as New
Zealand and Australia. The company also has lack of presence in the online market.
Opportunity: It states the area that an organization has to grab the market. It is observed that the
company has the opportunity to grasp the share of online market in high percentage.
Threats: It states the areas or factors that raise the risk for the company. It has been seen that the
major threat of the firm is its competitors. It is observed that the high competition among the
companies increasing the threat of losing the consumer (Mind Tools, 2018a).
PESTLE Analysis is a strategic management model which is used to study the macro-
environment factors. The tool is used to analyze the external factors such as political, economic,
social, technology, legal and environment. This tools especially used while the organization
expand the business in new market. The external factors affect the operation of the company or it
helps to attain the higher level of growth in the market. The decisions of government or the
policies developed by the government are the major factor that affects the business that is why; it
is required to evaluate the external environment of the business.
Political: Government of Australia introduces the policies related to exporting or importing the
business in the other country. It affects the operation activities of Wesfarmers while import the
raw material from the other country (Bajada, 2018).

Competitive Strategy 3
Economic: It is observed that the GDP rate of economy of Australia is $1.69 trillion which is
considered as one of the largest economies in the world. The willing power of customers is
increasing due to high percentage of GDP. The demand of consumers is high towards the
products as the willing power of consumers is increasing.
Social: It has been seen that the wage rate is high in Australia as compare to the other companies.
It is a challenge for the company to reduce the cost of production as the labor cost is high due to
high wage rate (Lewis, Pond, Cameron, and Lewis, 2019).
Technology: Australia is one of the countries who adopts or invest the large amount in
technology. It is also considered as the advance technology country in the world. The company
has the advantage to implement the technology to gain the advantage.
Legal: It has been seen that the government of Australia introduces laws and policies to protect
the consumer rights. As the company operates in two countries that is why; it has to follows the
rules and regulation of both the countries such as Australia and New Zealand.
Environmental: It is observed that the company delivers the consumers goods that can be
affected by changing weather. It can be said that the changing weather is an issue for the
company.
Porters Five Forces Framework is a strategic framework that is used by the corporation to assess
the competitive position. This tool is especially used to analyze the competition in the market. It
helps to identify the structure of the industry in order to examine the corporate strategy. In this
tool, there are five key drivers such as buyers, suppliers, competitors, substitute and new entrants
(Mind Tools, 2018b).

Competitive Strategy 4
The threat of new entrants: It has been found that Wesfarmers has moderate level of threat of
new entrants. There is low capital is required to move in the industry of supermarket due to
which the new entrants has high chances. It is observed that the present companies build their
strong brand image in the market due to which it will be a challenge for new players or firms to
beat the current companies.
The threat of competitors: The degree of threat of competitors is high as there are large
numbers of organizations that offer the similar services to consumers. Woolworths, Aldi are the
main competitors of the company (Owler, 2018).
The threat of substitute: The threat level of substitute is moderate as there is no item that can
replace the consumer goods but it is observed that there are many competitors in the market that
can replace the consumer priorities to purchase the product.
Bargaining power of buyers: The degree of bargaining power of buyers is high as there are
great number of companies operates in the similar industry to deliver the services to consumers.
The companies are also provided the services in low prices to attract the buyers towards their
own products or services (Madsen, and Walker, 2015). As the consumer have various options to
purchase the product from different companies due to which the bargaining power of buyers is
high.
Bargaining power of suppliers: Negotiating power of suppliers is high as there are huge
numbers of suppliers in the market. Wesfarmers operate with the 15000 suppliers due to which
the company also has many options to switch with the supplier in low cost (Wesfarmers, 2018b).

Competitive Strategy 5
At the end of the report, it is concluded that strategic management tool is beneficial for the
company to analyze the business environment. The company can run the business smoothly by
assessing the internal or external environment. As per the examination of Wesfarmers, it is
observed that the external factors can affect the organization in future but by using the strength
or grasping the opportunities areas it will also attain the higher level of achievement in the
market.

Competitive Strategy 6
References
Ansoff, H. I., Kipley, D., Lewis, A. O., Helm-Stevens, R., and Ansoff, R. (2018) Implanting
strategic management. Springer.
Bajada, C. (2018) Recent government initiatives in tackling the underground economy in
Australia. In Size, Causes and Consequences of the Underground Economy (pp. 243-274).
Routledge.
Lewis, J., Pond, P., Cameron, R. and Lewis, B. (2019) Social cohesion, Twitter and far-right
politics in Australia: Diversity in the democratic mediasphere. European Journal of Cultural
Studies, p.1367549419833035.
Madsen, T. L., and Walker, G. (2015) Modern competitive strategy. McGraw Hill.
Mind Tools. (2018b) Porter's Five Forces. [online] Available from:
https://www.mindtools.com/pages/article/newTMC_08.htm
Mind Tools. (2018a) SWOT Analysis. [online] Available from:
https://www.mindtools.com/pages/article/newTMC_05.htm [Accessed 19/08/19].
Owler. (2018) Wesfarmers's Competitors, Revenue, Number of Employees, Funding and
Acquisitions. [online] Available from: https://www.owler.com/company/wesfarmers
[Accessed 19/08/19].
Wesfarmers. (2018a) Who we are. [online] Available from:
https://www.wesfarmers.com.au/who-we-are/who-we-are [Accessed 19/08/19].

Competitive Strategy 7
Wesfarmers. (2019c) Sourcing. [online] Available from:
https://sustainability.wesfarmers.com.au/our-principles/sourcing/suppliers/ [Accessed
19/08/19].
Wesfarmers. (2019b) Wesfarmers Shareholder Review 2018. [online] Available from:
https://www.wesfarmers.com.au/docs/default-source/reports/wes18-048-2018-shareholder-
review.pdf?sfvrsn=6 [Accessed 19/08/19].