Strategy Development Tools: PESTLE, SWOT, and Five Forces Analysis

This essay provides a comprehensive analysis of three key strategic development tools: PESTLE, SWOT, and Porter's Five Forces model. It begins by defining each tool and explaining its purpose in analyzing the external and internal business environments. The essay then applies these models to real-world business examples, including PepsiCo, Commonwealth Bank of Australia (CBA), and CSL Ltd., to illustrate how these tools can be used to assess opportunities, threats, strengths, and weaknesses, and to understand the competitive landscape. The discussion covers political, economic, social, technological, legal, and environmental factors (PESTLE), internal strengths and weaknesses with external opportunities and threats (SWOT), and the competitive forces within an industry (Porter's Five Forces). The essay concludes by summarizing the importance of these tools in formulating effective business strategies to achieve organizational goals and maintain a competitive advantage.

1/1/2019
Strategic Development
PESTLE, SWOT and FIVE FORCES MODEL
Student Details
[company name]

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Table of Contents
Introduction.........................................................................................................................................2
Strategic Development Models.......................................................................................................2
Strategic Model 1: PESTLE Analysis.........................................................................................2
PESTLE Analysis of PepsiCo..................................................................................................3
Strategic Model 2: SWOT Analysis.............................................................................................3
SWOT Analysis on Commonwealth Bank of Australia (CBA)............................................4
Strategic Model 3: Porter’s Five Forces Model.........................................................................5
Porter’s Five Forces Analysis in CSL Ltd..............................................................................5
Conclusion..........................................................................................................................................5
References............................................................................................................................................7

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Introduction
Strategy Development is required in present complex business environment, as due to
complex business nature the management of organisation has to critically analyse each
and every factor in business environment and plan and prepare accordingly so that the
planned activities could lead the organisation towards achievement of organisational
goals. In order to effectively analyse and manage the business environment the
management of the organisation requires strategic development tools, that help the
organisation in effective analysing of the business environment both internal and external
and to develop business strategies that fulfil the needs and requirements of the
environment and help the organisation to achieve its goals (Whittington, et al., 2016). The
essay is focused towards analysing such strategic development tools and their
implementation in today’s business.
Strategic Development Models
Strategic Model 1: PESTLE Analysis
PESTLE Analysis is a strategy management tool that helps an organisation to analyse its
external environment and the key factors influencing the organisational performance. It
provides an analysis of the Political, economic, social, technological, legal and
environmental factors of the external environment, such factors have direct as well as
indirect affect on the working of the business activities (Yüksel, 2012).
Political factors are related to the governmental policies and the political nature of the
nation in which the business is operating it analyses the effect of such factors on the
working of business. Economic factors have their direct impact on the business profitability
as the economic factors include the interest rates, inflation, consumer’s disposable income
and the economic growth of the country. Such factors analyse the return on investment for
the organisation. Social factors include the beliefs and values that people follow in the
societies of the target market. As the cultural and religious beliefs of customer base has
adverse effect on the organisational performance. Technological factors help the
organisation in analysing the technological changes in the environment and how they can
impact the organisation. Legal factors analyse the laws and regulations of the nation such
as health and safety law, employment laws, consumers rights protection act and product
safety and quality standards. The last element of analysis is the environmental factors
which helps the organisation in defining its responsibility towards environmental changes

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and the activities that need to be conducted in order to reduce the effect of such
environmental changes (Perera, 2017).
PESTLE Analysis of PepsiCo
PepsiCo being among the largest selling beverage and snacks brand has to effectively
analyse the external environment and develop a strategic plan in order to overcome the
effect of external environment.
PepsiCo deals in beverage and eatables, and the government of the country ensures that
the product provided is of set quality standards and safe for consumption. The economic
factor of an economy affects the business of the PepsiCo as the disposable income of a
consumer or the inflation within the economy will help PepsiCo in developing competitive
prices and be able to stay in market. PepsiCo should focus on developing an image of
healthy food and beverage brand in the society, so that the target market can be attracted
towards product. PepsiCo should focus on its online presence on social media or
implement online advertisement strategies in order to focus and attract its customer and
meet the requirement of recent technological changes. PepsiCo has set quality standards
for its product and ensure the safety and security of its workers in order to meet the legal
requirements of the nation. Pepsi is focused on improvement of water efficiency in order to
reduce the impact of water scarcity on the people (PepsiCo, 2016).
Strategic Model 2: SWOT Analysis
SWOT Analysis is an analytical tool that helps an organisation in order to analyse its
internal capabilities (strengths) that helps the organisation in achievement of its goals and
negative aspects which can influence the effective performance of the organisation. Also,
the SWOT analysis helps an organisation in identifying the external or future opportunities
that the organisation can use in future as a competitive advantage or to improve the
organisational performance, along with analysing the threats that may arise in the
business environment that may affect the business working or development. Conducting
SWOT Analysis helps the organisation in analysing the above-mentioned factors and
develop a strategic plan that can lead the organisation towards the achievement of set
goals and objectives (Helms & Nixon, 2010). SWOT Analysis is a tool that helps the
organisation in identifying the impact of external factors that are beyond organisation’s
control, and making the use of the internal factors to overcome the impact of those
external factors.

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Figure 1 SWOT Analysis Tool (Source: (Sarsby, 2016))
SWOT Analysis on Commonwealth Bank of Australia (CBA)
Being a leading company in the Australian industry, the Commonwealth Bank of Australia
has numerous competitive benefits or the strengths, such as strong brand portfolio,
effective market strategies, highly skilled workforce and effective training and development
programs, strong cash flow and a tack record of product innovation, with such strengths
the company has established a reliable and customer base which contributes to company
development. Along with such strengths the company has certain weakness, as the
company has developed a limited marketing strategies and a lot of products from the
portfolio are not advertised effectively, also the company is a leader in its core business
but the expansion in other segments does not have enough market share and has a
limited success. The diversified portfolio has resulted in lack of effective management of
the products that the available for the customers. The company has an opportunity to
expand its business online as most of the customer now-a-days search for products
online, and also with the introduction of social media the customers are more active on
internet. The lower interest rates by the Australian government in recent years is an
opportunity for the company to invest and expand its operations. Political uncertainties in
the nation, the technological advancements by its competitors are the threat for the

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Commonwealth Bank of Australia, which can affect the business of the organisation in
near future (Commonwealth Bank of Australia, 2019).
Strategic Model 3: Porter’s Five Forces Model
The five forces model defined by the Porter’s, helps the organisation analysing its
competitive environment and develop strategies in order to beat the market competition
and can achieve the set objectives and goals of the organisation (Magretta, 2012). The
five force model is based on the analysis of the five market factors that include the level of
existing competition in the industry, the possibility of entry of new firms in the industry, the
power supplier poses while delivering the materials required by organisation, the power of
customer to bargain for the price of the product and the availability of the substitute
product within the market. As such factors help the organisation in critically analyse its
industry competitive nature, and focus on its own organisational structure and policies so
that the effect of such factors on the organisation’s performance can be reduced (Dobbs,
2014).
Porter’s Five Forces Analysis in CSL Ltd.
The CSL Ltd. deals in pharmaceutical and biotechnological industry, such industry has a
strong product differentiation, requires high investment and various legal formalities to
enter, as a result such industry has a low threat of new firms in the industry. The suppliers
in pharmaceutical industry in Australia are also numerous as compared to the companies
therefore the power of suppliers is low in the industry as the company can easily shift to
other substitute supplier for the resources, by developing an effective supplier and
customer relation can help the CSL Ltd. in reducing the threat of power of supplier for the
future uncertainties. The buyers in an industry have a high bargaining power due to high
competition in the industry, as with increase in competition within the industry the
customers get more substitute for a single product and also have the power to bargain for
better price in the industry. CSL Ltd. should focus on developing innovative and unique
products along with competitive rates so that the customers can be attracted towards the
company’s product and can reduce the chance of moving of customer towards the
available substitute. CSL Ltd. operates in a very competitive and complex industry as the
pharmaceutical industry in Australia has a number of firms operating which creates an
intense competition, but the low entry barrier is a benefit in this competitive industry and
for CSL Ltd (CSL Ltd., 2019).

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Conclusion
The strategic development models help the organisations in developing and analysing the
organisational environment and prepare strategies accordingly. In order to analyse the
various aspects of the environment there are various strategic development tools that
helps the organisation in effectively develop strategic plans and policies which ensures the
organisational success in the industry. As discussed PESTLE analysis helps an
organisation in effectively analysing the impact of the external factors such as government
policies, social and economic condition of nation, as the SWOT analysis helps the
management in focusing upon its internal condition and find out the future opportunities
available in the industry, and the Porter’s five forces model helps in analysing the
competitive factors within the industry and find out ways that can help the organisation in
maintaining a competitive edge in the industry.

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References
Commonwealth Bank of Australia, 2019. About Commonwealth Bank. [Online]
Available at: https://www.commbank.com.au/about-us.html?ei=CB-footer_about-commbank
[Accessed November 2019].
CSL Ltd., 2019. Our Company. [Online]
Available at: https://www.csl.com/our-company
[Accessed November 2019].
Dobbs, M. E., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp. 32-45.
Helms, M. M. & Nixon, J., 2010. Exploring SWOT analysis – where are we now? A review of
academic research from the last decade. Journal of Strategy and Management, 3(3), pp. 215-251.
Magretta, J., 2012. Understanding Michael Porter: The Essential Guide to Competition and
Strategy. 1 ed. United States of America: Harvard Business Press.
PepsiCo, 2016. PepsiCo Launches 2025 Sustainability Agenda Designed to Meet Changing
Consumer and Societal Needs. [Online]
Available at: https://www.pepsico.com/news/press-release/pepsico-launches-2025-sustainability-
agenda-designed-to-meet-changing-consumer-a10172016
[Accessed November 2019].
Perera, R., 2017. The PESTLE Analysis. First ed. s.l.:Nerdynaut.
Sarsby, A., 2016. The SWOT Framework. In: A. Sarsby, ed. SWOT Analysis. England: Leadership
Library, pp. 7-11.
Whittington, R. et al., 2016. Exploring Strategy: Text and Cases. Eleventh ed. s.l.:Pearson
Education .

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Yüksel, İ., 2012. Developing a Multi-Criteria Decision Making Model for PESTEL Analysis.
International Journal of Business and Management, 7(24), pp. 52-66.