The case above signals a situation in which the management of a company intends to consider internal variables of their business as well as the political, environmental, sociocultural, and technological aspects of their firm’s industry in assessing the viability of their business in the market environment. Considering this, it suffices to say that the best tool to use in this situation is Porter’s Five Forces, SWOT and PESTLE analysis.
Brief Analysis of SWOT and PESTLE
SWOT Analysis:
SWOT is a tool that individuals or firms employ to assess the “strengths, weaknesses, opportunities, and threats” present in their business as well as to their market environment (Gürel & Tat, 2017). Principally, the tool empowers them to identify the opportunities and critical threats that lie within their competitive market environment. Also, it leads them to discern their intricate strengths and weaknesses that could likely foster or hinder their competitiveness against rivals in their market environment. This situation is critical as it permits individuals or firms to identify their business goals accurately, prioritize them accordingly, and incorporate effective strategies to accomplish these aims (Gürel & Tat, 2017). As a consequence, the tool helps to boost their productivity by serving as a guide that leads them to know the appropriate strategies requisite to enhance their competitiveness and attain their business goals.
PESTLE Analysis:
PESTLE is also a strategic management tool which firms often employ to examine the external factors that exert an influence on their business. Principally, it considers the “Political, Economic, Social, Technological, Legal, and Environmental” factors that play a critical role in influencing the operations of a firm (Rastogi & Trivedi, 2016). A firm’s awareness of these factors is essential as it permits them to grasp their implications on business better and work to minimize their effects on the firm. This situation arises because when firms assess their efficacy using PESTLE, they become able to evaluate the full extent to which these factors may build up and foster or impede their operations in their market environment. The tool permits them to recognize critical issues and seeks to address them promptly to minimize their effects on their business.
The Efficacy of the Tools in Analyzing the Market
Utilizing SWOT and PESTLE analysis is the best way for the firm to analyze both its internal and external business environments. As aforementioned, the awareness of businesses regarding their strengths, weaknesses, opportunities, and threats is pertinent to enabling them to discover their competitive advantages, internal flaws, external threats that may impede progress, and opportunities present in their market environment which they could uptake to foster their productivity. In regard to PESTLE, the tool permits firms to recognize the potential ramifications of the “Political, Economic, Social, Technological, Legal, and Environmental” factors present in their market environment in their business (Rastogi & Trivedi, 2016). This situation enables them to strategize their business initiatives in alignment with these factors, hence minimizing their implications for business.
Utilizing the Tools in the Firms Business Plans
The firm may use SWOT analysis to assess its internal strengths and weaknesses. This situation will permit them to identify the capabilities that could either bolster or hinder their competitiveness hence develop strategies to maximize their strengths and minimize their weaknesses. Also, using SWOT would permit them to know the opportunities and threats present in their external environment, hence permit them to develop strategies to maximize their utilization of opportunities while minimizing the effects of these threats to enhance the effectiveness of their businesses. In regard to PESTLE, the awareness of these factors will enable them to attune their strategies with the “Political, Economic, Social, Technological, Legal, and Environmental requirements of the countries the business is considering hence fostering their chances of success in these market environments” (Rastogi & Trivedi, 2016).
References
Gürel, E., & Tat, M. (2017). Swot Analysis: A Theoretical Review. Journal Of International
Social Research, 10(51).
Rastogi, N., & Trivedi, M. K. (2016). PESTLE technique–a tool to identify external risks in
construction projects. International Research Journal of Engineering and Technology (IRJET), 3(1), 384-388.
Do you still believe the tools that you selected will work best for a global strategy? Why or why not?
Business management has to make global business strategies to emerge in the competitive global business landscape. Using different strategic or analytical tools is the best option for the management of the company to derive some key business or market insights and shape pertinent strategies. For Instance, SWOT analysis is the best tool for the company to identify strengths, weakness, opportunities, and threats. Still, it is an effective tool because it streamlines several opportunities that the company can utilize in the new market. It can be said the SWO analysis, due to the streamlined opportunities for the business, is a prominent source to make better strategies and navigate some key strategic alternatives. It is a fact that many threats can hit the strategic position of the company in global markets. Thus, by navigating the threats along with the intensity and level of risk, risk-free global strategies can be formed (Perera, 2017).
On the other hand, PESTLE analysis will work for the company when making entry and shaping the global business strategies. The PESTLE analysis provides the whole picture of the market through navigating political, economic, social, technological, environmental and legal factors. For Instance, when shaping the global strategies in the United States of America, the technology factor is necessary to navigate. After examining the technological factor, the relevant strategy of the company can be technological transformation.
What evidence do you have to support your decision?
The possible evidence that I have to support my decision is the sustainable competitive advantage that has been gained by many companies through using these tools. The management of companies, from retail to manufacturing, has used these tools to integrate with the market trends and the internal strengths and external business environment. The information from these tools has increased the managerial cognition of small and large companies, and they maintained a sustainable competitive advantage in the global market. In the competitive market or competitive business era, every business needs a pertinent rationale to use any business to make the business strategy. For Instance, if a company finds the low buying power of people due to the low-income rate in an economy, the company can come up with the penetration pricing strategy. PESTLE also indicates some key economic insights for business management, and it is effective, for making global marketing mix strategies (Evans, 2013).
How would you refute the people who chose an additional tool rather than one of the tools that you selected?
Many entrepreneurs or organizations are looking to use additional analytical tools to make business decisions. I would like to refute people who are willing to integrate with tools other than I selected to make better global strategies. For Instance, for both small and large businesses, people may use tools which are better to make financial decisions. In this competitive landscape, I would like to argue that profitability is not a single factor. Organizations must use SWOT and PESTLE tools to understand the market and come up with some strategies that can help to exist strongly (Evans, 2013).
Analysis of US market through PESTLE
For Instance, my company is looking to enter the United States of America. The PESTLE analysis can give me some key insights (Perera, 2017). For Instance, the political system is stable, which can boost the business support from the government. The economic growth is high with the higher buying power of people. Thus, skimming pricing can be practiced. In the individualistic culture, some behavioral segments in the US market can be made. People are tech-savvy, and integration with modern technology can be the best strategy to sustain the business. Business is to be regulated due to several equal opportunities, environmental and discrimination acts. Accordingly, strategic decisions can be made by the company to gain success in the United States.
References
Evans, V. (2013). Key Strategy Tools: The 80+ Tools for Every Manager to Build a Winning Strategy. Pearson UK.
Perera, R. (2017). The PESTLE Analysis. Nerdynaut.
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