The strategy development based tools that are used by different organizations are mainly based on the analysis of the environment in which it operates in an effective manner. The internal environment of organizations is examined with the help of SWOT framework. The external environment of the company is thereby examined with the help of PESTLE framework. The industry of operations of an organization has been examined with the help of Porter’s five forces based framework. The essay will be based on the analysis of the different frameworks that are used by different organizations in the industry (Frynas and Mellahi 2015).
Analysis of SWOT framework
SWOT framework is mainly used for the purpose of the analysis of internal environment of different companies. Different aspects of an organization which form a part of the analysis are strengths, weaknesses, opportunities and threats.
Strengths – The strengths of the company form an important part of the internal environment which can play a significant role in analysing its position in the industry. The demands of different services and products that are provided to the consumers play a significant role in analysing the strengths.
Weaknesses – The weaknesses of organizations are based on the analysis of the usage of the financial resources in a weak manner. The reasons behind the loss of revenues to the competitors of the company are a major part of the weakness. The loss of shareholders due to organizational operations plays an important part in the analysis (Grant 2016).
Opportunities – This factor is mainly based on the ways by which the companies are able to analyse the expansion based possibilities in the future. The new areas of the market and the expansion based capabilities of the company are a part of the opportunities.
Threats- The levels of competition in the industry and low prices of similar types of products that are offered to the customers by other companies are a part of the threats. The control of the company over its competitors is also an important part of threat analysis (Hassan, Sistani and Raju 2014).
Example – The SWOT analysis of Woolworths can provide the management with a proper view of the internal environment of the company. The analysts can thereby gain a view of the operations of the company in order to improve its position in the market in an effective manner.
Analysis of PESTLE Framework
The PESTLE framework plays an important role in the ways by which the factors of the external environment are able to affect the operations of an organization. The external factors are thereby analysed with the help of diverse factors which include, political factors, economic factors, social factors, technological factors, legal factors and environmental factors.
Political factors – The political environment of a country plays a significant role in the ways by which the organization operates in the industry. The regulations that are developed by the government play a significant role in the ways by which the company can develop its policies as well. The trade based tariffs, the fiscal policies developed by the government can also affect the company (Yu 2017).
Economic factors – These are important determinants based on the economic performance of the countries in which they operate in an effective manner. The company is affected in an effective manner with the help of the economic conditions of the country. The rise which has been experienced in the inflation rates of the country can play a significant role in the operations of the company (Kolb 2016).
Social factors – The social factors are thereby grounded on the ways by which customers are able to affect the profitability of the company in an effective manner. The change in demands of the consumers in different countries can also play an significant role in the revenues and profitability of the company.
Technological factors – The changes that have taken place in technologies that are used by the companies can also play an important part in their profitability. The automation based activities of the countries are able to speed up the processes of the company in an effective manner (Porter and Heppelmann 2014).
Legal factors – The laws and regulations that are developed in the country have played an important role in the ways by which the companies can create their position in the environment. The legal factors are thereby able to affect the formation of regulations by the company.
Environmental factors – The ways by which the production based processes of the company are able to affect the external environment has played an important part of the operations of different organizations. The company thereby needs to analyse the operations in order to improve the operations in an effective manner (Shabanova et al. 2015).
Example – The analysis of the external environment of Woolworths can be analysed in an effective manner with the help of PESTLE framework. The various analysts thereby need to analyse the external environment in different areas of the world before they are able to enter a market area in an effective manner.
The Porter’s five forces framework is largely used by the organizations and analysts in order to analyse the industry in which they operate. The different forces which form a major part of the Porter’s framework are as follows,
Competitive rivalry – The strength that is shown by the competitors of an organization in the market are a part of this factor. The intense rivals are able to affect the prices of different products and services in an effective manner.
Supplier power – The power of suppliers who provide the products to the company is an important part of the prices that are decided for different services and products. The power of these suppliers can be decreased with the help of efficient supply chain (E. Dobbs 2014).
Buyer power – The power that has been gained by the buyers in the industry can also have a huge effect on the product offerings and prices. The large customer base of a company is able to reduce buyer power.
Threat related to substitution – The different options based on services and products that are offered to the customers have negative effects on the profitability.
Threat related to new players in the market – The entry of new companies in the market are an important part of the lack of revenues of the companies (Rothaermel 2016).
Example – The analysis of retail industry of another country will be helpful for the expansion based plans that have been developed by an organization like Tesco.
Analysis of Porter’s Generic strategies model
The implementation of generic strategies will play an important role in growth strategies that have been implemented by an organization in the market.
Cost leadership strategy – This strategy is mainly based on the low cost based products that are offered to customers by an organization in order to face the competition in the industry.
Differentiation strategy – This strategy is based on the ways by which the company is related to the quality based differentiation that has been developed by the management in order to grow in the market (Sheehan and Bruni-Bossio 2015).
Conclusion
The essay can be concluded by stating that the use of different frameworks for the purpose of analysing the internal and external environment can help analysts in creating a position of the company in the industry. The frameworks play an important role in the ways by which the organizations are able to develop effective strategies.
References
Dobbs, M., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.
Frynas, J. G., and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.
Grant, R. M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hassan, S. M., Sistani, A. J., and Raju, R. S., 2014. Top Online Shopping E-companies and their Strength and Weakness (SWOT). Research Journal of Recent Sciences ISSN, 2277, 2502.
Kolb, B., 2016. Marketing strategy for creative and cultural industries. Routledge.
Porter, M. E., and Heppelmann, J. E., 2014. How smart, connected products are transforming competition. Harvard Business Review, 92(11), 64-88.
Rothaermel, F. T., 2016. Competitive advantage in technology intensive industries. In Technological innovation: Generating economic results (pp. 233-256). Emerald Group Publishing Limited.
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), 705.
Sheehan, N. T., and Bruni-Bossio, V., 2015. Strategic value curve analysis: Diagnosing and improving customer value propositions. Business Horizons, 58(3), 317-324.
Yu, T. Y., 2017. The Evolutionary Profile of the Composite Retail Industry: Perspectives of Industry Life Cycle and Business Ecosystem.
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