The organizations nowadays specifically focus on the strategies related to development tools in order to analyze the environment of the market. This helps the organizations to develop strategies in order to achieve competitive advantage. The analysis of the internal and external environment is done using the comprehensive tools like SWOT and PESTLE framework respectively. Using Porter’s five forces, the organizations can analyze the business competition prevailing in the market. Resource-based view framework is used to develop strategies to effectively utilize the organization’s available resources. In this paper, the discussion will be focused on all the above 4 tools mentioned by taking practical examples of some reputed companies.
This framework is used around the globe by all organizations for the analysis of internal and the external environment. SWOT analysis defines itself as Strength, Weakness, Opportunities, and Threats. It is one of the techniques which help the organizations in understanding its strengths and weaknesses, learning about the opportunities open for you and tackling the threats that the organizations may face (Shabanov et al., 2015).
The strengths and weakness are generally related to internal factors of an organization like the organizational policy, unique selling proposition of your organization, employee motivation while the other two factors which are opportunities and threats define the external factors like the technology used by the rival companies, policies of the government, level of competition in the market (Steffen, 2017).
This framework can be used to formulate some serious strategies and also gives an insight into the process to emerge as a leader in the competitive environment (Gamble and Thompson, 2014).
Apple Inc. is an innovative multination company in the field of technology that represents itself in the sector of electronic products. The global leader has a strong brand image in the world and has been recognized as the most valuable brand in the world.
The strengths of the company are its range of innovative products. When it comes to uniqueness, the company sets a benchmark every time a new product is launched. As the company has maintained its image in the market, it becomes important to match the customer’s expectation every time which is not easy and may strike as a weakness to the organization. As the products launched by Apple are incompatible with other services and products which sometimes impact the consumer decision making, the organization can create an opportunity by launching more compatible products. The key threat to apple is the market penetration by other rivals like Android which has more market share than Apple (Khan, Alam, and Alam, 2015).
Using the PESTLE framework, the marketers can analyze the external obstacles that the business is facing or may face while entering a new market. These factors are divided into a total of six factors which are political, economic, social, technological, environmental and legal. This tool helps us in reading the macro-environment factors that affect the organization’s strategic planning. These factors include all the factors that are not in direct control of the organization but may affect externally (Rothaermel, 2015).
Amazon is a famous e-commerce and cloud-based company making its mark in the market as an emerging brand. The E-retail giant has shown an exponential growth in the past few years and is on a scale of tremendous success.
With a presence over the globe, the company faces a lot of political disruption when entering a new economy which distorts the supply chain of the company and affects the sales. Even during the recession in the economy, the retail sector was in the boom which favored the company’s profit. Due to the changing customer demographics and shopping pattern, Amazon has created a social impact on the customers by making e-retailing available in every hand. Customers are more inclined to online shopping now than before. Amazon has been a tech-savvy and the use of technology for its business process is an example.
Recently, the organization has publically announced the use of Drones to deliver the products to customers. When it comes to legal compliance, the company has also faced several legal issues over the delivery of fake products which resulted in customer dissatisfaction. Amazon has been focusing on environmental friendly products and investing in areas like packaging and delivery. It has also invested in waste reduction and eco-friendly products.
This framework educates us with the identification and evaluation of the five forces that help in shaping the business process. The breakdown of five forces are-
The industry rivalry is the level of competition in a market. When the level of rivalry is less in the market, the organization can get higher profits. An organization’s power can be significantly reduced if a new entrant becomes an effective competitor and is a threat to the company (Rugman and Verbeke, 2017). The power of suppliers is how easily the suppliers can drive the prices up. The power of buyers is the ability of the customers to drive the prices down. The substitute products launched by the competitors possess a threat to an organization and the particular organization becomes weakened in terms of power (Jarzabkowski and Kaplan, 2015).
Figure 1
(Source: Research Methodology, 2018).
Uber is an industry leader in taxi services, cab sharing, and the transportation industry. Offering services at a cheaper price has been the forte of this company which helps in getting a competitive edge over the others.
With its presence across the continents, Uber faces threat with the local rival companies like Lyft in USA and Ola in India. There is a big threat of new entrants in this industry as the business model on which Uber operates is easily imitable. Uber faces the threat of substitute with the local transportation companies as it has to offer services which others don’t. Uber completely relies on its supplier’s i.e. its drivers for their cars. The supplier here has an upper hand and can affect the brand name and image. The company doesn’t have permanent buyers and its customers have the option to choose from several other service providers.
This framework defines that an organization is a bundle of resources and it is the effective use of these resources and their combination, which makes the firm stand out from the others. The resources should qualify the four characteristics which are defined by the VRIO model which are valuable, rare, and inimitable (Johnson, 2016).
The resource is said to be valuable when it helps in getting a competitive advantage. A resource which is limited to a specific company is said to be rare in nature. If any other organization is not able to imitate your resource then it is said to be inimitable. A specified quality of the resource is that it should be organized enough to give the competitive edge (Elmes, and Barry, 2017).
Zara is a famous fast fashion company present all over the world. Zara has a very good brand image and a global presence which makes it a valuable resource. Due to the dispersed manufacturing system of Zara, it enables the organization to meet the needs of different people around the globe which makes it rare resource. The company always maintains its brand value with the quality of product offered which becomes difficult to imitate. With around 3000 designers and 650 stores of Zara, it has organized itself as an organized resource.
Conclusion
It has been seen with the above discussion that the development tools helps in providing a cutting edge to the organization and helps in gaining competitive advantage
References
Elmes, M. and Barry, D., 2017. Strategy retold: Toward a narrative view of strategic discourse. In The Aesthetic Turn in Management (pp. 39-62). Routledge.
Gamble, J. and Thompson, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-Hill.
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.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Khan, U.A., Alam, M.N. and Alam, S., 2015. A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), pp.955-961.
Research Methodology., 2018. Five force analysis. [Online]. Available at: https://research-methodology.net/apple-porters-five-forces-analysis-3/. [Accessed on 8 August, 2018].
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Shabanova, L.B., Ismagilova, G.N., Salimov, L.N. and Akhmadeev, M.G., 2015. PEST-Analysis and SWOT-Analysis as the most important tools to strengthen the competitive advantages of commercial enterprises. Mediterranean Journal of Social Sciences, 6(3), p.705.
Steffen, B., 2017. The physics of software tools: SWOT analysis and vision. International Journal on Software Tools for Technology Transfer, 19(1), pp.1-7
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