Discuss about the Organization Stability and Productivity.
An organization’s strategy is defined with the help of various tools that are used in business. Some of the tools that are used are PESTEL, SWOT, Porter’s five forces, STEER etc. All these techniques help in the strategic planning which defines the growth of the organization in future. The formal consideration of using these techniques are the three questions: As to what the company does, it deals with whom and how it excels. There is another question of how the company deals with the competitors. These tools are important to make any kind of business strategy as it helps in shaping up the structure of the organization. This essay focusses on the PESTEL, SWOT and Porter five forces tools and their details as to how they help the organization is discussed.
SWOT analysis is one the very effective tools that is used in every other organization. It helps the company understand its Strength, weakness, opportunities and threats. SWOT analysis objective is to provide the judgements that are structured in any of the processes of the company. While the strengths and weakness is considered to be the internal part of the company, the opportunities and threats are the external part of the organization (Osita, et al., 2014).
Strengths: When the strengths of the company are measured, these are the questions which a company should keep in mind.
Weaknesses:
Opportunities:
The opportunities which can be useful are:
Threats:
PESTEL analysis helps in determining the environment in which the company does its business. It is related to the external environment. These factors are Political, economic, social, technological, environmental and legal. All these factors are analysed to see the market growth or decline in a very specific field (Gupta, 2013).
Political Factors: Political factors always include regulations made by the government like laws made on employment or the tax structure. If the company is starting then it should be aware of all the political factors around it.
Economic Factors: Economic factors affects the power of purchasing of the company and the capital cost. The economic factors will help the company to produce products that will help the company gain the competitive advantage. The organization also needs to consider the capital cost that will then be employed.
Social Factors: These factors include the size of the market and the consumer’s preferences. If the social factors are considered, the company can satisfy the needs of the customers easily. This way, the company can build relations with the customers for a longer period of time by trying to educate the customers about the its products.
Technological Factors: Technological factors are more important than any other factors for the company. They help the organization show as to whether the company is using the state of the art technology or not. Technology keeps on changing every now and then. If the company wants to stay in business, it should be aware of the changes in the technology (Rastogi & Trivedi, 2016).
Environmental Factors: These factors include weather, climate change, and other environment factors. These factors might affect some industries like tourism, insurance, and farming. They also affect the operation of the company.
Legal Factors: These factors include law of employment, law of consumerism, law of discrimination, and health and safety laws. Legal factors can also make an impact on the company’s capital cost (Ho, 2014).
In the year 1979, Michael E. Porter founded these five forces. These five forces help the organization to determine the power of the company and its position in the market. If the company is trying to expand, these forces will be able to know about the development of new products and the profit of the company (Indiatsy, et al., 2014).
Power of Suppliers: Number of suppliers are included in the power of suppliers and also the switching cost is included which differs from one to another. If the product is unique, the significance of the supplier can easily affect the company’s profit. In case if the organization maintains good relations with the manufacturers or the developers, they also try and maintain the relations with the company and give them good deal in the cost of the supply (Njambi , et al., 2016).
Power of the Buyers: The pricing of the product is very important when the buyers are considered. It all depends on the market size and the significance of the buyer. The cost of switching also matters from the suppliers to the buyers as well. In case if the company is providing the customers with the complete services and the training of the usage of the products, the customers will always be satisfied. But for maintaining the long-term relations, the technology used should be latest and the unique products should be launched (Tehrani & Rahmani, 2014).
Rivalry: Competitive rivalry is also very important factor to determine the company’s positioning in the market. If there are a lot of competitors who offer great services and the products which are similar, might create an impact on the market and it can be divided within the companies. In order to maintain the sales, the organization should be aware of such things and improve accordingly (Majumdar & Bhattacharya, 2014).
Substitution Threat: In case if the substitutes exist in the market, there is always a possibility of a new threat for the company. The customers in that situation might shift from one company to another. If the cost of the competitor company is low, there is a huge possibility of the customers to shift to the rival company.
Threat of the New Entrants: If the market is increasing and going into a huge profit on the whole, it will always attract the new entrants. If the new entrants come, the profit of the company can affect in a bad way (Omsa, et al., 2017).
In the essay, some of the development tools like PESTEL, SWOT and the Porter’s five forces are discussed. All these factors are important to analyse the company’s positioning in the growing market. They will help the organization to analyse the internal factors like strengths and weaknesses as well as the external factors such as political, legal, threat, opportunities etc. A company has to go through these types of strategy development tools all throughout the year to maintain a good knowledge about the surroundings the organization is working in.
References
Gupta, A., 2013. Environment & PEST Analysis: An Approach to External Business Environment. International Journal of Modern Social Sciences, 2(1), pp. 34-43.
Ho, J. K.-K., 2014. Formulation of a Systemic PEST Analysis for Strategic Analysis. EUROPEAN ACADEMIC RESEARCH, 2(5).
Indiatsy, C. M. et al., 2014. The Application of Porter’s Five Forces Model on Organization Performance: A Case of Cooperative Bank of Kenya Ltd. European Journal of Business and Management, 6(16).
Majumdar, S. & Bhattacharya, P. P., 2014. Porter Five Forces Analysis of the Leading Mobile Cellular Telephony Service Provider in India. International Journal of Computer Science and Mobile Computing, 3(2), pp. 146-152.
Njambi , E., Lewa, P. & Katuse, P., 2016. Relationship between Threat of Substitutes and Competitive Advantage of Large Multinationals in Kenyan Beverage Industry. The International Journal Of Business & Management, 4(7).
Ommani, A. R., 2011. Strengths, weaknesses, opportunities and threats (SWOT) analysis for farming system businesses management: Case of wheat farmers of Shadervan District, Shoushtar Township, Iran. African Journal of Business Management , 5(22).
Omsa, S., Abdullah, I. H. & Jamali, H., 2017. Five Competitive Forces Model and the Implementation of Porter’s Generic Strategies to Gain Firm Performances. Science Journal of Business and Management, 5(1), pp. 9-16.
Osita, I. C., R, I. O. & Justina, . N., 2014. Organization’s stability and productivity: the role of SWOT analysis an acronym for strength, weakness, opportunities and threat. International Journal of Innovative and Applied Research, 2(9), pp. 23-32.
Rastogi, N. & Trivedi, M. K., 2016. PESTLE TECHNIQUE – A TOOL TO IDENTIFY EXTERNAL RISKS IN CONSTRUCTION PROJECTS. International Research Journal of Engineering and Technology, 3(1).
Tehrani, M. B. & Rahmani, F., 2014. Evaluation Strategy Michael Porter’s five forces model of the competitive environment on the dairy industry. American Journal of Engineering Research, 3(5), pp. 80-85.
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