Write an essay of explaining what the main strategy development tools are and how they are used in business.
In the current business environment, the business management put major emphasis on its strategic plan. The essay aims to throw light on the value of all the strategic tools. In the essay, PESTEL analysis, SWOT analysis tools and the Porter`s Five Forces Model would be used to discuss the different industries at the macro environmental level.
PESTEL analysis is a widely used competitive tool that includes the crucial factors. These include the political, economical, social, technological, legal and environmental factors. PESTEL analysis helps in providing details about the challenges that a company would face in the prevalent macro environment conditions of any country. For the purpose of understanding the Estia health care agency which is one such wellness and age care centre situated in Australia will be chosen for analysis (Estia Health.2018).
Political factors: this plays a significant role in determining the effect of political factors on age care industry’s profitability for long-term. Political stability is highly important for the success of an organization in the nation. The aged age care industry gets impacted by various factors that include tax legislation charges, insurances mandates and consumer protection (Zhao, Pan and Chen 2018). Several tax policy changes can also affect the government spending for the age care. The given company, Estia health care agency benefits from analyzing the political factors by understanding the laws they must abide by and to conduct efficient business practices.
Economic factors: the organization is easily affected by various economic factors such as unemployment, inflation and interest rates. With the increase in the rate of unemployment, the firm faces major problem to provide adequate services to their client. Estia health care agency needs to be concerned about the political factors because it needs to understand the economic status of the country before setting the price and other similar components.
Social factors: The social factors comprises of proper understanding of the changes in public values and demographics. As all the communities faces different kinds of beliefs, fears and cultural norms, an analysis of the different social factors may help a firm to understand their potential target market and their psychology. Estia age care centre benefits from this information and implement changes in packages offered for higher attraction from the older crowds.
Technological factors: The age care industry is improving at a rapid rate due to technological advancements. With the help of technological development the medical devices allows its patients to receive adequate care (Goncharuk 2016). Hence, these changing technological factors have a huge impact on the firm as they require the Estia Health care to change its equipments and employ the latest technology to attract a larger crowd.
Environmental factors: The environmental sustainability procedures have both financial and environmental advantages for aged health care industry. Aged health care firms are now using environmentally-friendly design for the centre. Estia might benefits with this information by applying the necessary procedures for waste disposal and utilization of the environmental friendly designs
Legal factors: The aged care industry in Australia has various laws and legal procedures. Failure to practice such legal procedures often leads to adversely affect the overall organizational strategy. If Estia is aware of the given components then it may conduct lawful transactions. (Albert and Grzeda 2015).
Hence, it may be stated that using the PESTLE analysis, an age care company like Estia may become aware of the various external factors and conduct activities keeping in mind each of these factors.
SWOT analysis is used to analyze the strengths, weaknesses, opportunities and threats of the business in the real world. This tool is mostly used to ascertain the marketing strategy, business plan and product segment. This is a powerful strategic tool is used in the business and marketing areas (Kangas et al. 2016). The internal factors are the strength and weakness of an industry while the external factors include opportunities and threats. SWOT analysis is a major evaluation process that helps in evaluating the strength, weaknesses opportunities and threats of an organization (Australianchildcarealliance.org.au. 2018). The ways in which SWOT Analysis might beneficial an organization named Australian Childcare Allianz in Australia are given as follows
Strengths: the major strengths of the childcare business are well qualified staffs, recognizable name brands, proper infrastructure and adequate fees structure. Conducting a Strength analysis helps the Australian Childcare Allianz to identifying the key performing areas of its business. This further strengthen these factors for a competitive advantage of the firm. (Arabzad et al. 2015).
Weaknesses: The childcare business has various competitors in the business market. Other weaknesses include lack of experiences, small physical facility and legal and financial issues. In Australia, for Australian Child care Allianz identification of its weakness like the presence of the competitors, the presence of the extra laws and legislatives goes a long way in helping the firm to improve its operations.
Opportunities: the childcare business in the country properly review the market to obtain the opportunities for the industry. The major opportunities for the childcare industry include stable economy and expanding the customer base (Jensenn 2016). In Australia, for the Australian Child care Allianz reviews the opportunities with this tool because it helps the firm to grow and become a leader in the given market.
Threats: the threats in the childcare organization like Alliance mostly include competitors and the immense possibility new childcare centers within the same region. The potential legal issues can also be very costly. For Australian Childcare Allianz, threats include adequate insurance coverage and competitor presence. In addition to this failure to comply with Australian’s employment laws as well as licensing requirements is a huge threat.
Hence, Australian Childcare Alliance is able to analyze the various opportunities and threats that able to succeed and assist them in forming strategies accordingly.
Porter’s five force model is used to evaluate the level of competition of a particular industry or segment (Borland et al. 2017). This consists of major five forces that are supplier power, buyer power, threats of new entrants, substitute’s threats and competition rivalry. The customers’ demands high quality services at affordable and low prices. The Australian Tours company in Australia make use of the given tool to analyze the presence of factors in the industry that have an impact on its operations (Bing.com. 2018).
Theory of substitute goods: in tourism industry there are generally high chances for new business start-ups. This challenge will constantly make its customer to choose their services over its competitors. The Australian Tour Company is affected if customers start choosing these substitutes and hence, they should look after the component.
Bargaining power of buyers: the bargaining power of the buyer is very high due to the advancement of technological power and increase internet usage. As there are various tour companies present, it becomes increasingly difficult for the Australian Tour Company to manage the operations of their business and conduct an external check. Having knowledge about this domain helps them in strategizing for the future and price the products accordingly.
Rivalry among the existing competitors: in the tourism industry there is a fierce competition between the rivals. The Australian Tour company analyzes the competitors because it helps them in understanding the strategy as adopted by them (Wolf and Floyd 2017).
Barriers to entry: differentiation is one of the most significant barriers existing in the tourism industry. The hotels and hospitality business are free to differentiate itself as per the services, location, quality and amenities. Other barrier to the tourism industry is expertise. The Australian Tour company keeps in mind these factors to understand their impact on the business.
Bargaining power of the suppliers: in tourism industry, employees to the firm are major suppliers and the suppliers can easily be affected. The bargaining power for the labor supply is very high when only few skilled employees are present to fill the industry. The Tour Company Australia is aware of the power of suppliers so that they can form appropriate programs for their management (Gans and Ryall 2017).
Therefore the most commonly used strategic tools and competitive analysis has high significance in obtaining proper understanding about the business environment. Through PESTEL analysis, the macro environment of aged care industry has been evaluated with respect to the Estia health. SWOT analysis helps in getting the clear idea about the internal and external condition of the childcare industry prevalent in Australia using the example of Australian Child Alliance. Lastly the five forces model of Porter measures the various competitive forces present in the tourism industry with respect to the Australian Tour Company. Therefore it is highly essential for all industries to lay major emphasis on its business strategic plan
References:
Albert, S. and Grzeda, M., 2015. Reflection in strategic management education. Journal of Management Education, 39(5), pp.650-669.
Arabzad, S.M., Ghorbani, M., Razmi, J. and Shirouyehzad, H., 2015. Employing fuzzy TOPSIS and SWOT for supplier selection and order allocation problem. The International Journal of Advanced Manufacturing Technology, 76(5-8), pp.803-818.
Australianchildcarealliance.org.au. ,2018. Home – Australian Childcare Alliance. [online] Available at: https://australianchildcarealliance.org.au/ [Accessed 19 Apr. 2018].
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.
Bing.com., 2018. Australian Tours Company. [online] Available at: https://www.bing.com/cr?IG=7089FDCAFD3C40598CB67ECC2BAE296D&CID=0D8361D599576BA71C636A0398F86AEC&rd=1&h=LSd4bvc62geZPB1y3Z9f_3qh4KHFGEvppE0P1eqyUQ0&v=1&r=http%3a%2f%2fwww.australiantoursco.com.au%2f&p=DevEx.LB.1,5069.1 [Accessed 19 Apr. 2018].
Borland, H., Ambrosini, V., Lindgreen, A. and Vanhamme, J., 2016. Building theory at the intersection of ecological sustainability and strategic management. Journal of Business Ethics, 135(2), pp.293-307.
Estia Health.,2018. Estia Health Aged Care: Australian Aged Care | Aged Care Facilities | Residential Aged Care Facilities | Nursing Homes. [online] Available at: https://www.estiahealth.com.au/ [Accessed 19 Apr. 2018].
Gans, J. and Ryall, M.D., 2017. Value capture theory: A strategic management review. Strategic Management Journal, 38(1), pp.17-41.
Goncharuk, A.G., 2016. Banking sector challenges in research. Journal of Applied Management and Investments, 5(1), pp.34-39.
Jensen, A.B., 2016. Business Modelling as aWay Forward for Strategic Management Processes-A Case Study of SME’s. Journal of Multi Business Model Innovation and Technology, 4(1), pp.1-34.
Kangas, J., Kajanus, M., Leskinen, P. and Kurttila, M., 2016. Incorporating MCDS and voting into SWOT: Basic idea and experiences. Serbian Journal of Management, 11(1), pp.1-13.
Lechner, C. and Gudmundsson, S.V., 2014. Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal, 32(1), pp.36-60.
Shah, S.T.H., Jamil, R.A., Shah, T.A. and Kazmi, A., 2015. Critical Exploration of Prescriptive and Emergent approaches to Strategic management: A review paper. International Journal of Information, Business and Management, 7(3), p.91.
Wolf, C. and Floyd, S.W., 2017. Strategic planning research: Toward a theory-driven agenda. Journal of Management, 43(6), pp.1754-1788.
Zhao, X., Pan, W. and Chen, L., 2018. Disentangling the relationships between business model innovation for low or zero carbon buildings and its influencing factors using structural equation modelling. Journal of Cleaner Production
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