HI6006 - Strategy Tools: PESTEL, SWOT, Porter's Five Forces Analysis

This essay provides a comprehensive analysis of strategy development tools, focusing on SWOT, Porter's Five Forces, and PESTLE. It explains how these tools are used to evaluate a company's internal and external environments, competitive rivalry, and overall strategic position. The SWOT analysis framework assesses strengths, weaknesses, opportunities, and threats, using Ford as a practical example. Porter's Five Forces framework evaluates competitive rivalry, supplier power, buyer power, the threat of substitutes, and the threat of new entrants, with Nestle as an example. The PESTLE analysis examines political, economic, social, technological, legal, and environmental factors, using Apple as a case study. The essay concludes that these tools are essential for companies to achieve growth and maintain a competitive edge in the market. Desklib offers a variety of resources, including solved assignments and past papers, to aid students in their studies.

Running Head: Competitive Strategy
Competitive Strategy

Competitive Strategy
Introduction
It can be analyzed that development tools play a great role in conducting the activities in
the right direction. It is seen that in this essay the focus will be given more on the development
tools like SWOT, Porter five forces and Pestle analysis. These tools help to maintain proper
balance in the overall activities of the company.
SWOT ANALYSIS FRAMEWORK
SWOT analysis is one of the development tools that provide information related to the
internal environment of the organizations. In this tool, there are four sections that represent the
concept of strength, weakness, opportunities, and threats. It is the important concept as it helps to
give actual position which the company has in the market. It is seen that the focus is given by the
managers of the organization and rectification are done so that competitive advantage can be
achieved (Bell and Rochford, 2016).
This framework represents the strength of the company which has a connection with
various factors of the marketing mix and it is also related to the market share of the company.
The strength of the company represents the brand image and the overall goodwill possessed by
the company. Next section is related to the weakness in which it has a link with the insufficient
resources available with the company. Also in many companies, there is weak distribution
channel which comes under the section of weakness (Huggins and Izushi, 2015).
The threat of the company is related to the number of competitors of the company in the
market. The last section represents opportunities that have a connection with the new product
development and also the chance available to the customers to achieve large market share (Hill,
Jones, and Schilling, 2014).
Practical Example is related to Ford in which it can be analyzed that the company has
a large market share and a good image. It is seen that goodwill of the company is one of the
major strength that helps to achieve success in the competitive environment. The weakness is
related to the high-cost structure and also low exposure in the Asian market. It is analyzed that
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Competitive Strategy
due to this weakness negative impact is seen on the growth of the company (Santos and
Laczniak, 2015).
Opportunities of the company are related with the strategic partnership and also the
company has new emission standards. Next aspect is related to a threat which the company faces
in the competitive market. Ford has to face m major threat due to the fluctuation that takes place
in the exchange rate and also the threat is from the competitors like Toyota and BMW who offer
same products to the customers. Top management or the managers analyze all the aspects so that
growth can be achieved in an effective manner (Sminia, 2017).
Porter Five Forces Framework
By focusing on this development tool it is analyzed that if the company consider this
model then it can be possible to evaluate the competitive environment of the company. In this
framework, there are five aspects of competitive rivalry which is related with the strength
possessed by the competitors and also the prices of the competitors are evaluated. Power of
supplier is also one of the factors which are related to the overall suppliers or number of
suppliers in the market. If there are large numbers of suppliers then power is reduced (Pucciarelli
and Kaplan, 2016).
Power of buyer is also considered as a factor in which proper evaluation is made of the
buyers who are availing the services of the company. The threat of substitute is one of the
aspects in which proper analysis is made of the substitute that is seen in the market and it gives
impact on the overall prices of the company. The threat of new entry is one of the factors in
which analyze is made by focusing on the new entry of the business in the market. It is analyzed
that it has a link with the overall high cost and also concerned with the entry in the market of the
new business.
Example of Nestle
It is seen that in there are many new businesses who are entering the market due to this
the new entrants is high in the market. The substitution of products is also high as there are
many competitors who are present in the market like Cadbury from which the customers can
easily substitute the products.
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Competitive Strategy
It is seen that power of buyer is high in this company as there are many buyers who
purchase the products and if the focus is given on the supplier then it can be analyzed that it is
also high as there are many suppliers who offer products to the customers in the market. If
rivalry level is analyzed then it is seen that it is high as the competition level is high in the
market (Porter and Heppelmann, 2014)
PESTLE Analysis framework
This framework focuses on the external environment analysis of a company which takes
into consideration six aspects like political, economic, social, legal, environmental, legal and
technological. In this framework, the entire external environment is considered in which the
activities of the company are conducted. It is seen that there are many aspects of the analysis
which help to analyze the environment of the industry. In this framework, there are six aspects
like
Political factor
It is related to the government rules and regulations that influence the activities of the
company. It can be evaluated that it gives direct impact on the policies which are given by the
government and it considers tariff policies and fiscal policies which impact the activities of the
company. It is seen that these factors give impact on the activities of the company (Grant, 2016).
Economic factor
It is seen that it affect the overall performance of the company in a specific country. It
also takes into consideration the rate of inflation that gives impact on the prices of the services
and products. Revenue is also one of the factors which get affected and also impact is seen on the
purchasing decision of the customers (Moutinho and Phillips, 2018).
Technological factor
It is also related to the technologies which are latest and helps the company to enhance
innovation. The activities are conducted smoothly of the company considers latest technologies
to conduct the activities (Van Alstyne, Parker, and Choudary, 2016).
Legal factor
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Competitive Strategy
It considers the external and internal factor of the company and also many laws are there
which is important to be considered by the company.
Environmental factor
It has a connection with the environment of the surroundings in which the company
conducts the activities. This is an important aspect which impacts the overall activities of the
company.
Example
Apple is one of the practical examples and it is seen that the policies of the government
give effect on the overall cost with is concerned with the labor and manufacturing. Also, the
effect is seen on which impact the power of the buyers of the customers who are from different
countries. The technological factor is also one of the aspects which show that products which are
offered can be innovative. Also, it is the formation of the apple company is affected by the rules
and policies which are imposed. Environmental issues are related to the used products which
should be disposed of so that activities can be conducted smoothly.
Conclusion
So, it is seen that these tools should be considered by every company so that growth can be
achieved in the market.
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Competitive Strategy
References
Bell, G.G. and Rochford, L., 2016. Rediscovering SWOT’s integrative nature: A new
understanding of an old framework. The International Journal of Management Education, 14(3),
pp.310-326.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Huggins, R. and Izushi, H., 2015. The Competitive Advantage of Nations: origins and
journey. Competitiveness Review, 25(5), pp.458-470.
Moutinho, L. and Phillips, P., 2018. Strategic analysis. In Contemporary Issues in Strategic
Management (pp. 46-79). Routledge.
Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming
competition. Harvard Business Review, 92(11), pp.64-88.
Pucciarelli, F. and Kaplan, A., 2016. Competition and strategy in higher education: Managing
complexity and uncertainty. Business Horizons, 59(3), pp.311-320.
Santos, N. and Laczniak, G., 2015. Marketing to the poor: A SWOT analysis of the Market
Construction Model for engaging impoverished market segments. Social Business, 5(2).
Sminia, H., 2017. The industrial organization approach. In The Strategic Manager (pp. 51-70).
Routledge.
Van Alstyne, M.W., Parker, G.G. and Choudary, S.P., 2016. Pipelines, platforms, and the new
rules of strategy. Harvard Business Review, 94(4), pp.54-62.
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