The company deals with external factors, such as the ones outlined in this Five Forces analysis of the business. The analysis model provides information for strategic management to address the five forces, namely, competitive rivalry, the bargaining power of customers or buyers, the bargaining power of suppliers, the threat of substitution, and the threat of new entrants.
Therefore, they must have essential analytical tools of different levels to help and identify what factors will affect the environment, which kinds of elements impact on the competition and how to assess the resource of the firm very well.
This essay explains the value of various strategic analytical tools in the context of competitive analysis at the macro environmental, industry level and firm level. The essay in the following sections is structured as follow.
Lastly, we will discuss the SWOT Analysis Model to analyze and chart the strategic directions of a firm in the competitive business environment.
For each of this model, we will discuss the origins, applications and usage, the advantages and limitations of the model. It is widely used and it is a popular concept in strategic and competitive analysis.
However, the origin of this model unknown — it is hard to determine who the first researcher who started the application of this concept. Perhaps the concept of environmental analysis was already understood since the first merchant. However, to understand how the environmental analysis research had evolved through the last four decades, we can review the work of DillThompsonStarbuckand Lenz and Engledow It is commonly agreed that the concept of PESTEL comes from PEST Analysis Model; it is a method of analyzing the macro environment by strategists, which involves all factors that influenced in the industry and organization.
Basically, the PEST framework encompasses four factors as follow: Political, Economic, Social and Technological. The model incorporates various factors in the changing external environment and how these factors affect the organization.
Six factors under the model are discussed in the following points. Political factors concern about the changes in political climate of a nation. In a globalized business world, this is increasingly important. For example, any businesses having subsidiaries in Thailand must stay alert when the political climate in Thailand had become uncertain and gloomy.
Economic factor which are related to the economical landscape and atmosphere in the business landscape. For example, continuously increasing in unemployment rate indicates the economy of the country is not optimistic.
Social factors which are mainly about what is occurring in societal aspects and how these aspects influence the business environmental as well as the strategy of the organization.
It is about the characteristics of the societal context in which the organization exists. For instance, high pressure work and life making people much more concerned about relaxing had helped in the emergence of health and spa industry. Technological factor means how the technologies change has significant impact on the organization and market.
For example, digital communication, bio-technology, chemicals, energy revolution, nano-technology are just some examples of technology changes that should be aware by managers in formulating the company strategic and competitive analysis.
Environmental factors are concerning what is occurring in environment aspects, and under this context, all the factors in physical and biological environments within which an organizations should be considered by the manager.
For example, global climate changes and the emergence of green technology are pressing all the businesses to become aware of pollution issues and to exercise corporate social responsibility; they should proactively implement green technology in their business processes.
Legal factor however, is about the changing of legislations and about the way government interferes with or manages the business environment, such as changes in the tax policy and enforcement of tariffs to certain products.
The six factors are really powerful and useful tool widely applied for business planning, marketing planning, organizational change, product development and research report. In business and strategic planning, it provides context background and information about targets such as growth, new product development and brand positioning for the managers and organizations.The business environment affecting the clothing retail industry in the UK is made up of both the macro and micro environment.
The macro environment is the most general layer of the business environment and consists of broad environmental factors that impact all organizations across all industries so firms use frameworks such as Pestel and Swot to analyse environmental factors.
For Lloyds Bank Pestle and Swot analysis, see Lloyds Bank Pestle & Swot.; For HSBC Pestle and Swot analysis, see HSBC Pestle & Swot.; For RBS Pestle and Swot analysis, see RBS Pestle & Swot.; INTRODUCTION.
Barclays is a British bank with operations in more than 50 countries including the US, Japan, India, Europe and many African countries. Porter’s Five Forces analysis is a framework that helps analyzing the level of competition within a certain industry.
It is especially useful when starting a new business or when entering a new industry sector. Porter’s Five Forces analysis is a framework that helps analyzing the level of competition within a certain industry. It is especially useful when starting a new business or when entering a new industry sector.
SWOT and Michael Porter's Five Forces analysis model are both useful tools in strategic planning. While they both help in assessing your company's strengths and weaknesses relative to industry.
1 SWOT, PESTEL, Porter’s 5 Forces and Value Chain Company Overview Bloomberg L.P is a business news corporation based in the United States of America.