Essay on Competitive Strategy: Applying Strategic Development Tools

This essay provides an in-depth analysis of four key strategic development tools: PESTLE, SWOT, Ansoff Matrix, and Five Forces analysis. The essay explains how each tool is used to assess external and internal factors influencing a company's performance. It applies these tools to real-world examples, including McDonald's (PESTLE), Samsung (SWOT), PepsiCo (Five Forces), and Apple Inc. (Ansoff Matrix), providing insights into how these companies navigate their competitive environments. The essay highlights the importance of these tools in strategic decision-making, market analysis, and the formulation of effective business strategies. The essay covers the strengths, weaknesses, opportunities, and threats faced by each company, along with an examination of market dynamics and competitive pressures.

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competetive strategy
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Essay
Strategic development tools provide organisations with benefits through which
effective planning and execution of decisions are made in critical manner. For strategic
development tools, organisations collect desired information and relevant data that are
processed according to the management tools to achieve strategic goals and objectives
( Qehaja , et al., 2017). There are many developments tools that are used by businesses, but
among all PESTLE, SWOT, Ansoff and Five Force analysis are the four tools that are
immensely used by contemporary organisations (Groenendijk, 2003). Therefore, this essay
will analyse these four management tools while applying them in real business environment.
PESTLE
PESTLE or PEST analysis tool is used by managements to identify and evaluate
external or macro factors facing the firm. This tool is mostly used at the time when
companies plan to enter new market because it helps organisations get a knowledge required
for formulating plans and for conducting situational analysis. PESTLE analysis comprises of
factors that are related to Political, Economic, Social, Technological, Legal and Environment.
To stay ahead of the game, organisations make macro or external analysis of their firms at
regular intervals as it helps them to identify significant changes in business environment that
needs alteration for effective business operations (Gupta, 2013).
Making PESTLE analysis of McDonalds will help in evaluating external factors that
presents threats and opportunities to the company while operating in macro environment.
Politically, McDonald has expansion opportunities due to its exclusive international trade and
global supply chain system. The company makes continuous reforms in its strategic and
practices to lesson taxes without violating country’s law (McDonald's, 2018). However,
nutritional values have affected the sales of company’s product many times. Economic
conditions have always been favourable for the company as McDonalds new market entry
strategy always targets developed and developing countries where economies of scale can
allow sales for the company products. Social factors have remained challenging for the
company due to change in lifestyle trend, as more people are switching from fast food to
healthier and fresh food. Technologically, McDonald has a strong base, however, its
diversification strategy shows more scope for improvement in it. Legal constraints in
diversified countries McDonalds operates in also affects company’s sales and cost factors.
Environmental factors affect McDonalds since most of its business is outsourced to franchise

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owners and any change in operating country’s climate can distress overall supply chain
system (Vrontis, 2008).
SWOT
SWOT analysis is most frequently used development tool which provide aid to the
management in the process of decision making. This tool is considered as the most effective
tools and very useful for the success of business since it prepares organisations for future
threats and opportunities. By identifying firm’s strengths and weaknesses, SWOT analysis
helps organisations discover new trends and threats that can be rectified before it turns out to
be distressing. It can also be said that SWOT analysis is a visual representation of internal
factors that are related to business environments that includes firm’s Strengths, Weakness,
Opportunities and Threats (Ritson, 2011). This development tools not only maximises
business strengths, but also alerts companies regarding obstructions that comes in growth
path while formulating strategic formulas to gain competitive advantage (Helms & Nixon,
2010).
Samsung is one of the leading brands dealing in electronic products and mobile
phones and making SWOT analysis of the company will help in evaluating firms’ internal
factors. Samsung biggest strength lies in its strong portfolio for which it has become one of
the known brands worldwide. Innovation and investment made in R&D products have added
to its strength. Company also follows diversification strategy by introducing wider range of
products in many countries. However, there are few weaknesses also like the company never
introduces new products on its own and always wait for its competitors to make the first
attempt. Dependency on foreign country production and outsourcing manufacturing for cost
curtail adds further to its weakness. Opportunity can be seen in Samsung company as there is
wide scope for opening more retail store that can attract customers in rural areas. By
providing customers with additional service, Samsung can maintain enhanced relationships
with its customers along with gaining loyalty. Nevertheless, continuous reformation in
technology and innovation affects strategies of Samsung. Threats from its competitors also
impacts product sales especially in Chinese market (Rasheed, et al., 2015).
Five Force Analysis
Michael Porter’s Five Force analysis is another strong development tool used by
businesses to analyse competitive position of the company in market or industry it operates
in. In fact, this tool determines the market competition in related industry and intensity in

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which competitors are behaving while competing with each other. This strategic tool helps in
formulating marketing mix for the company after identifying five factors: bargaining power
of suppliers, bargaining power of customers, threat of new entrants, threat from substitutes
and rivalry among present market players. This 5F model not only helps in formulating
appropriate marketing plans but also helps in determining market position of the organisation
while analysing weakness and strength in its position in regards to the above mentioned five
factors ( Njambi, et al., 2016).
PepsiCo is a strong brand in food and beverage industry where rivalry among
competitors is seen in aggressive manner. Fights between PepsiCo and Coca Cola has been
witnessed by everyone that gives biggest example which shows the level of competition
between rival companies and strong force which PepsiCo has to face while operating in
marketplace. Buying behaviour of customers have also been strong force for the PepsiCo
products as they tend to switch to other company products easily. Also, there are many
substitute products available in the market from which customers can choose according to
their preference and availability. Suppliers bargaining power is comparatively weak in
PepsiCo’s case due to high availability of alternatives (PepsiCo, 2018). Due to vast expansion
of business, PepsiCo offers regular purchase from its suppliers and in return, suppliers try to
remain attached with the company for which they offer raw materials in best prices. New
entry firms can also affect PepsiCo’s sale as customers may switch to new products.
However, the loyalty PepsiCo has gained from its customers makes difficult for new entrants
for entering in the market (Smithson, 2017).
Ansoff matrix
Ansoff matrix is one of those development tools that are used by organisations to
determine various risk related factors in business operations. Proper understanding of this
development tool can help organisations while formulating business growth strategies.
Ansoff matrix provide firms with scope of diversification by developing business policies
through identification of strategic options and combining it with matrix to evaluate different
risk levels in business. Developed by Igor Ansoff, this tool is massively used in contemporary
organisations due to easiness and unpretentious in use. Four categories that are included in
Ansoff matrix are Product development, Market development, Market penetration and
Diversification strategy (Gianos, 2013).

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Application of Ansoff matrix in Apple Inc. can help in understanding this
development tool in precise way. Market penetration means selling more products to the
existing clienteles that can be done through heavy promotion and cost reduction strategies.
Apple Inc. can release updated products at regular intervals that can keep customers engaged
with it products. This technique is generally used by large firms where they beat competitors
by releasing innovative and developed products periodically (Anon., 2017). Product
development is also required by Apple as the company uses its own operating system which
many times prove non-user friendly to its customers. Moreover, reshuffling of existing
products by making them more user friendly, Apple can gain customers loyalty. Market
development means to introduce existing products in new market for expansion and market
development. Since Apple is a known brand, its international strategies will not require much
efforts (Jeon, 2017). However, targeting new customer segment may require launch of new
products depending on the culture and preference of targeted market. Diversification is
dissimilar to market penetration as this requires launching entirely new range of products in
fresh market. Apple played risk fully here by introducing iTunes products in fresh market
even being in computer and mobile phone field (Dudovskiy, 2018).

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