HI6006: Strategic Development Tools and Business Strategy Analysis

This essay delves into the utility of strategic development tools, crucial for ensuring long-term organizational success. It identifies and analyzes four key tools: Porter's Five Forces, PEST analysis, SWOT analysis, and the Ansoff matrix. The essay explains how each tool aids in analyzing the competitive landscape, understanding external factors, evaluating internal strengths and weaknesses, and formulating effective strategies for market penetration, product development, and diversification. It highlights how these tools empower managers to make informed decisions, adapt to changing business environments, and achieve organizational objectives. The essay emphasizes that strategic development tools are integral to the process of achieving an organization's vision and mission statements, with the ultimate goal of gaining a competitive edge in the market.

Running head: UTILITY OF STRATEGIC DEVELOPMENT TOOLS
Utility of Strategic Development Tools
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1UTILITY OF STRATEGIC DEVELOPMENT TOOLS
The essay is going to discuss effective strategy development procedure in order to
assure long-term success for a certain organisation. There are specific activities and factors
practiced by managers, which work together to form a process that leads an organisation
towards its goal. Strategy development tools are an integral part of managerial practice as it
directly contributes to the organisations’ profit and accomplishment. These tools help the
managers to take significant business decisions as well as enable them to frame effective
business strategy for the firms. Several strategic models and frameworks have been
developed based on years of experience and learning; hence, with the purpose of guiding the
organisations to attain their objectives, this essay will focus on four major strategic
development tools and its function. As described in an article of Wirtz et al. (2016), these
tools are designed to cooperate with the managers to frame and practice their strategic ideas
both in predictable and unusual situations confronting an organisation.
It is difficult to define strategy, as it does not carry a single definition. However,
Management is able to make essential alterations in both business strategy and operations by
accessing necessary information and they should have the potential to understand the ways to
make best use of the resources. Strategic tools are framed by evaluating some essential
aspects of business operations. Before defining any business strategy, external environment
and internal capability of the firm should be analysed and after that management can
implement the strategies whatever have been framed (Achtenhagen, Melin and Naldi 2013).
The purpose of this essay is to elaborate four strategic development tools as follows, in order
to make the development process easier and enable the managers to be more productive.
The most trusted and one of the widely used strategic development tools, is porter’s
five forces model, which deals with competitive position of a certain organisation in the
market. Following the theory of Michael Porter, management should recognise the areas of

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competition to understand the position of their company and react accordingly. Moreover, his
theory suggests that several influencing aspects work behind while framing business
strategies. Besides, according to Nagle and Müller (2017), the responsible management
behind strategy analysis explores this model to understand new scopes that are related to
profitable product and service. Realising the centre of power, the model is used to identify
strength of an organisation as well as areas of improvement. Briefly, a detail reading of
Jarzabkowski and Kaplan (2015), the model of five forces delivers a perception of industry
rivalry and helps the organisations to recognise the opportunities recovering the threat of
competitors. The five forces are, 1) it is easy for suppliers to increase the price of the product.
The power of suppliers is driven by specific factors. The number of suppliers, the unique
characteristics of their service, strength and size; all these aspects influence the suppliers to
increase the price. It can happen if buyers are frequently switching from one supplier to
another, as well. 2) Buyers hold the power to bargain and drive down the prices of the
products of their choice. Again, various factors can be found which determine the intensity
of their power, such as, number of buyers and significance of them to the suppliers. It will be
expensive if the buyer is switching frequently among suppliers. The buyers will be powerful
and able to operate business in their own terms if they have very few competitors (Hesping
and Schiele 2015). 3) Threat of new competitors can trouble the existing company’s market
position if the business is profitable. 4) The fourth one is the threat of substitution. When
there are similar or better substitute products exist in the market, buyers tend to switch
between products to find out the best suitable one according to their requirement. This, not
only reduces the power of suppliers but also the price of the service is increased in this
course. 5) The rivalry is determined by the capability and number of business organisations
dealing with same service.

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Before framing and implementing strategies, it is essential to evaluate external
factors, which are controlling the business environment. The journal Ho (2014), delivers
perception of this analysis model where it has been stated that PEST analysis can be used as
an effective tool to identify external factors in the favour of a certain organisation. PEST
refers to political, economic, socio-cultural and technological factors, which consistently
influence the growth or decline of the market. By evaluating these areas, managers can
predict the future of a particular business industry. Political environment is controlled by
rules of government, tax and trade policies and political scenario. Economic factors include
the monetary resources and growth of the buyers along with interest rates and economic
trends of the market. Social factors deal with customer behaviour and population growth.
Finally, the dynamic nature of business environment has been influenced by advanced
technology mostly. Moreover, this factor initiates effective business decisions and encourages
innovation within an industry.
SWOT model is commonly used for its versatile capability of performing internal
analysis of a company, business unit or product. According to Bull et al. (2016), this
framework helps to understand market opportunity and threat of a certain organisation or
product based on its strength and weakness. This strategic framework helps a company or a
product to realise the worth based on its resources and gaps. Hence, the purpose of this
analysis can be divided into two parts. 1) It assists the company to decide goals for future and
2) make the managers realise the facts depending on which strategies can be framed to attain
the goals. SWOT stands for Strength, Weakness, Opportunity and Threats. Strength refers to
positive capabilities of a business organisation, which enable them to give extra ordinary
performance. On the other hand, weakness refers to all the limitations, which are present
within the system and restricts the organisation from performing. Based on company’s
strength that can be its resources or efficient managerial operations and weakness, which can

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be associated with poor customer service or several systematic gaps; this analysis suggests
opportunities and market threats, which the company may face while operating business
based on its strength and weakness. The relationship of strength and weakness with
opportunities and threat suggest the ways by which development can be done to access
opportunities and recover the threat of the competitors. The agenda of this analysis is to
suggest strategies to develop a better position in the competitive business environment.
Trait of a successful leader is to practice innovation to increase the amount of profit
under any circumstances. Business process is meant to be evolved, even when system is
working well and making profit. A consistent process of creative innovation within the
system helps the business to create impact over new customers and help to achieve a
sustainable position in the market. In a scenario of changed model of business or launching
new product or company in the market, managers consider Ansoff matrix tool of analysis to
find out strategies to introduce such diversification. It exposes the ‘risk of growth’ to the
managers and leading officials of a certain organisation. There are four aspects, which are
associated with risk, such as, product development, market development, market penetration
and diversification. For instance, suppose a car company had launched a car, which is holding
a saturated status at this point. In order to boost the sale of that particular car, company often
try to launch it after a little modification in those territories, which have not been explored
yet. In the language of business, it is called market penetration. As described in Hussain et al.
(2013), after targeting the desired market, through a PESTEL analysis opportunities and
threats have been identified. According to that, the company decides in which way they
should prepare themselves in order to reach their target market. Product development deals
with changing the specifications, which will appeal the new target market. Diversification is
about launching new products considering the market trend. This tool suggests strategies to
gain competitive edge in the market by modifying products and marketing strategy.

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Therefore, conclusion can be drawn by stating that strategy is not some possession of
the company, it is a dynamic set of principles, which are practiced and implemented in order
to achieve organizational goals. Hence, tools can be considered as a part of development
rather than a solution. These strategic development tools are adopted to work towards vision
and mission statements set by the foundation. Development of an organisation depends on the
choice of strategy development tools and strategic practices. The utility of these tools is
significant, as it enables the managers to take effective steps rationally. The framework
focuses on the practice of implementing and revising the strategies according to the
requirement of an organisation. It can be expected that the strategic development tools,
described in this essay, are capable of guiding business firms in terms of understanding the
requirement and achieving organizational objectives by implementing accurate strategy.

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References
Achtenhagen, L., Melin, L. and Naldi, L., 2013. Dynamics of business models–strategizing,
critical capabilities and activities for sustained value creation. Long range planning, 46(6),
pp.427-442.
Bull, J.W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C.,
Lambini, C.K., Rawlins, M., Baral, H., Zähringer, J. and Carter-Silk, E., 2016. Strengths,
Weaknesses, Opportunities and Threats: A SWOT analysis of the ecosystem services
framework. Ecosystem Services, 17, pp.99-111.
Hesping, F.H. and Schiele, H., 2015. Purchasing strategy development: A multi-level
review. Journal of purchasing and supply management, 21(2), pp.138-150.
Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European
academic research, 2(5), pp.6478-6492.
Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment,
and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2),
pp.196-206.
Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools‐in‐use: A framework for understanding
“technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.
Nagle, T.T. and Müller, G., 2017. The strategy and tactics of pricing: A guide to growing
more profitably. Routledge.
Wirtz, B.W., Pistoia, A., Ullrich, S. and Göttel, V., 2016. Business models: Origin,
development and future research perspectives. Long range planning, 49(1), pp.36-54.

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