HI6006 Competitive Strategy: Key Strategy Development Tools Analysis

This essay analyzes three key strategy development tools: the PESTLE framework, SWOT analysis, and the Profit model. The essay begins by introducing the concept of strategy development and its importance in business. The PESTLE framework is examined as a tool for external environmental scanning, discussing factors like political, economic, socio-cultural, technological, legal, and environmental influences, with examples. The SWOT analysis is presented as a tool for understanding internal strengths and weaknesses and external opportunities and threats, with examples. The Profit model is then discussed as a tool for determining the effectiveness of strategies and initiatives, including its components and applications in value proposition, with examples. The essay concludes by summarizing the significance of these tools in shaping business approaches and strategies. References are provided to support the discussion.

Running head: KEY STRATEGY DEVELOPMENT TOOLS
KEY STRATEGY DEVELOPMENT TOOLS
Name of the Student
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Author Note

1KEY STRATEGY DEVELOPMENT TOOLS
Introduction
The fundamental step involving the process of creation and administration of a
business is known as strategy development or strategy planning. Strategic developmental plan
involves the step of establishing specific aims and objectives in the form of a game plan for
the allotted team to perform (Ansoff et al. 2018). Strategy development process reflects the
ability of adapting to changing market dynamics (Liedtka and Kaplan 2019). The concept of
strategic management can be understood by an assembly of existent processes and activities,
which are utilized by organizations for the purpose of systematically aligning and
coordinating the resources and strategy with vision and mission of organization. The
procedures involved in strategic management transforms static plan that contributes in
decision making process. The purpose of the paper is to understand the concept and
application of few key strategic management development tools in context of business. The
paper will present a discussion regarding each of the tool with the association of practical
examples. The paper will be concluded by depicting a summary regarding the applications of
the tools in business processes.
Discussion
The concept of strategic management development includes tools for facilitating the
strategy of planning and execution. The strategic management development tools that will be
discussed in this paper are PESTEL framework, Profit model and SWOT Analysis.
PESTLE Analysis:
The framework depicts the macro-environmental factors that are utilized in for
scanning of external environmental components in strategic management. The factors or
aspects that are considered or analysed for understanding the external environment for an
organization are Political, Economic, Socio-cultural, Technological, Legal and
Environmental. The framework of PESTLE analysis is a constituent of external analysis

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while conducting functions like, strategic analysis, marketing research and market awareness
before establishing a business unit. The PESTLE framework is used for the purpose of
developing an understanding regarding decline or growth of the market, directions for
operational activity and position of the business in context of the external business
environment, under which the business is operating.
The Political factors depicts the intervention of government and political activities in
the business processes or limitation of specific organization. The aspects like, labour law, tax
policies, tariffs, environmental law, stability in political settings and trade restrictions are
included in consideration for political factors. The impact and intervention of government
and political activities on the business functions of an organization is assessed through the
framework of PESTLE. The economic factors like, exchange rates, economic growth, interest
rates and inflation rates are included for assessment of the impact of economic scenario of a
country on the business decisions of an organization (Alava and Mu 2018). The aspects
included in economic factors are exchange rates, interest rates, economic growth and inflation
rate. The business decision making and operational activities are majorly dependent on the
assessment of economic factors (Thompson, Strickland and Gamble 2015). An example for
the understanding of economic impact on business processes can be, the impact of interest
rates on cost of capital of company. Thus, the expansion and growth potentiality of
businesses can be understood through the understanding of the impact. The exchange rates of
a country or region can also affect costs related to imported goods, costs related to supply
chain activities and the exporting costs. The social factors involves aspects like age
distribution, safety and security, career attitude, population growth rate health consciousness
and cultural aspects (Phillips and Moutinho 2018). The socio-cultural factors of a country
reflects the potentiality to exert impact on the demand of company’s services and products.
For instance, ageing population group in a country may lead to less-willingness for working
amongst the workforce, which can result in the increasing cost of workforce. Moreover, the

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analysis of socio-cultural factors can positively contribute towards the understanding of
organizations regarding adapting to the changing environment. The aspects included in the
technological factors are automation, R&D activities, changing rate of technologies and
technology incentives. The implication of analysing the technological factors helps
businesses to understand the barriers to entry, determination of outsourcing decisions and
efficient production level. The technological shifts will influence the quality, costs and
stimulate innovative practices. For instance, companies like Uber, Ingogo identified the
concern of booking a cab and incorporated advanced technological factors addressing the
market gap (Morden 2016). The legal factors involves, consumer law, health and safety law,
employment law and discrimination law. The operational decisions of the company, demand
and cost structure of companies. The environmental factors involves environmental aspects,
ecological scenarios like, climate change, weather and physical external environment. For
instance the industries like, agricultural, tourism and hospitality industries can be majorly
affected by the climatic changes (Pan, Chen and Zhan 2018). The assessment of climatic
changes helps companies in incorporating sustainability for reducing negative environment
on the environment in which they operates.
SWOT
Strengths, weaknesses, Opportunities and threats reflects the full form of SWOT
framework. The framework of SWOT Analysis is one of the simplest yet effective strategic
tools. The strategic development tool is utilized for understanding the strengths, weaknesses,
opportunities and threats for the procedure of project planning. The identification of external
and internal aspects or factors of the business that may influence the organizational decision
represents the applicability of SWOT analysis tool (Gürel and Tat 2017). The understanding
regarding the competitive advantage of organizations as well as the gaps between objectives
and actions are identified in the SWOT framework (Noe et al. 2017). The conduction of
SWOT analysis contributes in understanding of the businesses regarding the internal and

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external environment by the viewpoint of operations of company from the backing of data
collected from PESTLE tool (opportunities and threats) and internal analysis for strengths
and weaknesses. The identified strengths needs to be aligned with the opportunities in the
market by maintaining the core competencies and expertise of an organization. Weaknesses
are identified for understanding the strategy gap in the organization. Transforming threats
into opportunities for stimulating an effective response for increasing challenges from
increasing competition (Roper and Hodari 2015). For instance, companies like Coca-Cola
still uses this strategic tool for generating the understanding of opportunities and threats so
that the strength of innovation and strong distribution network can incorporate necessary
changes (Phadermrod, Crowder and Wills 2019). The Company identified the weaknesses
and threat regarding the concern of only offering carbonated drinks, which was addressed by
introducing launching, energy drink, Diet Coke and Coca-Cola Zero
Profit
The deterministic, linear and algebraic model, which helps in determining the
effectiveness of incorporated strategies and initiatives of organizations is known as Profit
Model. The concept of Profit is used for structuring the constituents of modelling costs like
cost of losses, cost of learning, materials and depreciation. The application of Profit is vast
and mainly reflects contribution on production, rental or leasing, commissioning an initiative
and advertising. The concept of profit helps in stimulating the understanding of value
proposition in a business regarding the product and service offerings. For instance all the
major companies like, Apple, Amazon investigates the concept of value proposition by
including the concept of profit model. The value of a product or service or idea for the
customers that act as a driving force for deducing a buying decision. The drive of customers
can be understood by the application of Profit. The contribution of the concept of Profit can
help a company to develop differentiating factors for responding to the competitors selling
similar products (Hanson et al. 2016). There are various elements in the concept of profit

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model that can help in the profitability of businesses, including manufacturing and operating
component, sales and marketing elements and distribution of goods and services.
The production component in profit model helps in stimulating the process by which a
product is formed and the operating component helps in the determination of the required
equipment for facilitating the operational process. Sales and marketing component of profit
model helps in creating and addressing the market for product offerings. The distribution of
delivery component associated with the goods and services focusses on the availability of the
offerings to the target customers. Any discrepancy in this step will lead to the decline of
profit potentiality of the goods and service offerings of the organizations.
Conclusion
Therefore, it can be concluded from the paper that all the three models reflects
significant importance on the business approaches. For conducting an external analysis,
PESTLE framework or tool is used for the knowledge about the external factors that can
impact or influence the business decisions of organizations. After the application of PESTLE,
businesses can deduce the data regarding opportunities and threats of the market. For
understanding the internal factors that can shape the strategic management decisions of
organization, SWOT tool is used, as it can stimulate the strengths and weaknesses of the
internal environment of businesses. Another strategic development tool, Profit or profit
model can help in shaping the operational, sales and marketing and delivery function of
businesses by stimulating the value proposition of offered products and services. These tools
reflects the capability of influencing and stimulating various business approaches and
strategies.

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Alava, R.P. and Mu, J.M., 2018. PEST Analysis Based on A Case Study for. Neutrosophic
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Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R., 2018. Implanting
strategic management. Springer.
Gürel, E. and Tat, M., 2017. SWOT analysis: A theoretical review. Journal of International
Social Research, 10(51).
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Liedtka, J. and Kaplan, S., 2019. How design thinking opens new frontiers for strategy
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Management (pp. 46-79). Routledge.

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Roper, A. and Hodari, D., 2015. Strategy tools: Contextual factors impacting use and
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