|Assessment Details and Submission Guidelines|
|Unit Title||Competitive Strategy|
|Assessment Type||Individual Assignment|
|Assessment Title||Essay – Key Strategy Development Tools|
|Weight||20% of the total assessments|
|Word limit||Not more than 1500 words|
This assignment aims at ensuring that students have familiarised themselves with the foundational strategy development models and are able to relate them to current practical business examples.
Write an essay explaining what the main strategy development tools are and how they are used in business. Your essay must contain a comprehensive discussion of 3 of the following: PESTEL, Five Forces, Resource-Based View, PROFIT, Input/Output, SWOT Analysis (you may include Cross Impact Analysis), Generic Strategies, Ansoff, Ghemawat, with reference to academic journals and practical examples from industry.
In this essay, sub-headings are permitted. Be sure to use paragraphing.
Be sure to reference your sources in-text and provide a list of references at the end, all in Harvard style.
Key Strategy Development Tools
Strategic development or strategic planning is the fundamentals of creating and running the projects of the business. Strategic planning is the game-changer of a business (Johnson, 2016). This aims to set an objective and specify the goals of the business along with planning to change the course of action in response to changing market dynamics. Strategies and techniques are the planning of the actions to improve the practice of day to day works and skills to handle and mitigate the issues to improve practice. Here is the assignment it is to be discussed about the strategic development models and tools and relate them with the current practical business. The strategies are of many types like corporate, strategies, business-level strategies, functional strategies, etc. The strategic planning tools are SWOT Analysis, Porter’s Five Forces, PESTLE Analysis, Resource-based views, etc. This assignment provides a detailed analysis of the above-mentioned tools and techniques that are very much essential for the well-functioning of the business. A Lot of academic journals and practical examples have been included in this study to provide a detailed analysis and overview of the topic along with some practical business examples.
As commented by Johnson (2016), strategy development refers to the process of researching and the identification of the strategic options for better meeting the objectives. An organization needs to be aware of the internal as well as the external environment to develop successful strategies. In this regard, Afonina (2015) mentioned that there are different tools and techniques which managers uses for better internal and external analysis and thereby create competitive advantage. According to Pan (2019), PESTEL analysis is a tool that provides a macro-level study of the organization. The word PESTEL stands for political, economic, social, technological, environmental, and legal factors (Ortega, 2019). This influences the marketing and relationship of the company with that of the company's external ambiance and how it affects the relationship of the company and contributor towards development. Before setting up the company’s business at some foreign land and taking up business decisions the PESTEL analysis is indispensable. Political changes mean the kind of changes or the situation of the country of the business. Is it favorable for the concerned company to expand and to keep a track of the possible shifts of the new business or the decisions? Social factors determine the facts that are involved regarding the social changes and the change in the preferences and trends. In this case, the age demographics might also come into consideration. Economic changes are the greatest matrix of this analysis for the reason the economy of a country plays a huge role in the establishment of the business (Menet, 2016). Technological factor involves the analysis of the technological advancements of the country, that will facilitate product designing and production process. As opined by Fisher (2018), the PEST analysis provides the complete study of the external factors that might influence business expansion and encourages strategic planning by providing necessary data.
Figure1: Showing PESTEL Analysis
(Source: Menet, 2016)
Another popular strategy development tool is SWOT which stands for Strength, Weakness, Opportunity, and Threats for a company. As the views of author Menet (2016), the tool will help to identify those four major elements in an organization. It will give the idea about the strength of the organization which can be used in every strategy development process, the weakness will give the idea about the challenges which the organization may need to face in their business, the opportunities will help the organization to show their capability, helping to achieve the goals and expand their and effective way to make progress in their business and the threats will help to eliminate the possible risk in an organization. There is the specific stage when the organization should perform the SWOT analysis, those stages are like, before any taking any sort of organizational decision, whether it can be exploring new projects, revamping all the internal policy, considering the opportunities and launching new product or services in the market the SWOT analysis will help the organization to have the deep understanding about the capabilities of the company and where the ionization need to work harder. In order to perform the SWOT analysis, there has to be a table which has four sections, l then describe all the four emollient on those, the organization needs to understand all four parameters and need to put time and effort in order to have the whole picture about the organization. SWOT analysis gives insight about the organization like the internal and external factors. Basically, strengths and weaknesses are the internal factors and on another hand opportunity and weakness are the external factors of this method.
An organization has both the advantages and disadvantages of this methods, the positive effects of implementing this method in an organization are, it will to overcome the possible threats, identify the weakness and gives time to work on those, immediate action to the opportunities, information for strategy development, and gives the brief idea about the future scopes in an organization. Though the author Takata believes (2016) there are some pitfalls in the methods which are, there is a lack of hierarchy which will lead to the problems, it also sometimes leads the organization in poor decision making, too much information carets confusion, makes decision making difficult and at the end results are also not so effective. The company needs to use this tool with focus and with a complete understanding of the purpose of using SWOT analysis in strategy development.
Figure 2: SWOT Analysis
(Source: Takata, 2016)
Porter's Five forces are very simple but one of the most powerful tools in which industry experts are widely used in order to improve their business strategy. This tool was created by Harvard Business School professor Michael Potter in 1979 in order to increase profitability. This tool is used for understanding the competitiveness and the potential profitability in the market. The author Manuti believes (2017) It helps to adjust the strategies according to the market situation and gives the opportunity to develop the organization in the market, it will also help the organization to have a close watch on their competition. This model has five most powerful elements which have an impact on the organizational profit. The four elements of Porter's Five forces are competitive rivalry, supplier power, buyer power, the threat of substitution, and the threat of new entry. The competitive rivalry helps to understand the competition in the market and also helps to offer better deals to the customer which the other organization is not providing to the customer, it will give ideas to make the customer switch their brand. The supplier power will help to expand the supply and provide better suppliers who can provide better quality material, the stronger the position of the organization the better suppliers will get the organization. According to the author Varelas (2017) in order to start any company, the cost of the products should be low to attract more customers when the organization has few customers then it is the only way to increase the customer. In the market, there are lots of substitute products that can be a threat to the company. The company has to have knowledge about the substitute products in the market in order to make something that does have substitute products in the market. The new entry in the market can be a threat to the organization so it is important to have knowledge about the new competitors in the market.
There are several problems with this model which are it is too much concentrated on the positive sites of the industry which is not possible like, there are several problems in every industry so the organization has to understand that and prepare for that factor, this model is also not useful for the AII industries there is a certain limitation in the model, not covering the other factors which can be beneficial for the increasing profit in an organization.
Figure 3: Porter’s five Force
(Source: Pan et al. 2019)
In order to conduct the conclusion, the organization has to follow these specific tools for better performance and achieving the selected objectives. These methods are a fully proven solution for various organizational problems, increasing the efficiency of strategy development. The organization should follow these tools in specific stages of strategy development that will give a systematic and desired outcome from the strategy which the organization is developing in order to generate more profit from their business. Many organizations use these tools but not getting the expected results because of the lack of research and knowledge gap, using these tools effectively is also a skill which the organization needs to keep in mind.