SWOT analysis
There are many strategic development tools and techniques applied by businesses to facilitate envisioned state that are based on current situations of business policies and frameworks. Selecting best tools can be challenging for which business utilize different tools present in literature to identify business issues or opportunities (Ritson, 2011). These approaches not only give organisations frameworks to achieve future goals but also consider organisation’s capabilities, and development processes. The key factor behind the whole process is to bridge gaps that exist between operational and strategic aspects while creating change in requirements to achieve strategic goals ( Carpenter, et al., 2012).
SWOT analysis is most extensively used by organisations to provide them with assistance in decision making process. SWOT analysis is frequently used during starting phase of organisations or during the time when strategic planning is exercised ( Benjaafar, et al., n.d.). In short, SWOT analysis creates visual representation of various factors related to business: threats, opportunities, strengths and weakness. This framework is considered as a powerful tool in decision making process as it enables organisations to discover opportunities for success or possible threats before they become overburdening. By identifying market niche and competitive advantage business have over others, it helps in plotting and pinpointing strategic map that maximises strengths of business while alerting to weaknesses that can become obstruction in growth path (Helms & Nixon, 2010).
Apple Inc. is a reputed firm and making a SWOT analysis of Apple will present clear picture about how SWOT analysis is used in finding firm’s internal strategy. Strengths in Apple’s business strategy are result of combination of vertical and horizontal integration that comprises of wider range of products and interconnectivity among them. This enables firm to maintain a competitive advantage over competitors. Weakness seen in Apple’s strategy is they fail to anticipate introducing diversified products range while their competitors like Samsung always come up with new and diversified products range. Opportunities remains in Apple’s favour as it has tremendous scope of growth and penetration in new markets due to strong brand reputation and popularity among customers. However, threats can also be identified due to one major weakness in Apple’s pricing strategy that poses serious positioning issues in electronic marketplace (Khan, et al., 2015).
PESTLE analysis is a management tool that are used by businesses to identify macro or external forces facing the organisation. Complete form of PESTLE comprises Political, Economic, Social, Technological, Environment and Legal. In some cases, this analysis can be reduced to PEST. Before entering any new market or formulating strategies to expand business, tactical plan and strategic development tools can be implemented to conduct situational analysis. PESTLE analysis is the tool which must be repeated periodically to identify changes in firm’s external environment. Organisations that understands its importance and respond to necessary changes in macro environment are able to stay ahead of competitive business environment (Gupta, 2013).
PESTLE analysis
PESTLE analysis will help in understanding external environment of Singapore airlines and industry in which it operates. Political framework has always impacted airline industry operations as every country has their own ‘National Carriers’ with their country flag imprinted. Although Singapore Airlines possess ‘National Carriers’, any withdrawal from government side can prove disastrous for the firm. Since airline industry operates across border, they are subject to vagaries of nations and international economies. Singapore Airlines uses premium pricing strategy, but there are certain limits out of which it cannot be adopted that shows its economic threat from external environment. Social trends impact heavily on airline businesses particularly in faraway destinations and tropical places. Socially, wealthier the society is, individuals tend to spend more on travelling and tourism. Any shift in customer preference also bring additional challenge to Singapore airlines. Technological factors and innovations become necessary especially during long haul passenger list and premium market position for which airline companies spend considerable amount in research and development to boost sales. This factor has even impacted Singapore Airlines for which the company have to constantly implement technological and innovation change in its operations. Legal factors like regulatory changes and governmental policies also effects making international strategies for the company. While environmental hazards and emission of greenhouse gases issues plays a major role in bringing down company sales (Chen, et al., 2013).
5F model was introduced by Michael Porter which is a framework based upon competitive analysis of market in which business is performed. This model determines intensity of competition in related industry with framing marketing mix of five major competitive factors. In whole, this strategic development tool identifies threat of new entrants, bargaining power of suppliers, bargaining power of customers, threat from substitutes and lastly rivalry among current players. This tool also helps in evaluating attractiveness of industry and helps in finding out potential lines of business. 5F is also used for diagnosing accurately significant competitive elements in marketplace to determine importance and strength of each of the five forces ( Omsa, et al., 2017).
By analysing competitive forces of PepsiCo Inc., strategists can obtain complete picture about positive and negative impacts company has to face to remain sustainable in market related to food and beverage industry. New entry threats have always pressurised PepsiCo for which the company requires adding value propositions to its customers. Although PepsiCo holds a strong product portfolio, few issues found in some of its products have enabled easy access to new entry threats in marketplace. Bargaining power of suppliers seems high in PepsiCo case where they have potential to decrease profit margins of the company. PepsiCo have to make purchases of raw material from its suppliers and powerful ones negotiates to extract high price. Bargaining power of buyers also pressurises PepsiCo as they often prove to be more demanding than offered that puts pressure on the company profits in long run. Threats of substitute or new products are also an important factor for which the company faces constant challenges. There are many companies that offers similar products in lesser price that affects the sales of PepsiCo products. Moreover, existence of rival companies like Coca-Cola and Dr Pepper Snapple has decreased overall profit and sales of the company many times (Smithson, 2017).
Five Forces analysis
Ansoff matrix is another development tool immensely used in businesses that describes growth strategies of business. This matrix includes four categories in business strategy like market penetration, market development, product development and diversification strategy. Ansoff matrix was introduced by Igor Ansoff in 1965 to develop strategic business options and is most preferable in contemporary organisations due to its simplicity in use. According to Ansoff, there are effectively two approaches in growth strategy, product and market growth and when combined in a matrix, it delivers strategic options by differing risk levels in business (Gianos, 2013).
Ansoff’s matrix has huge impact on managerial practice in Woolworths. Market penetration strategy focuses more on existing product that enables Woolworths expand its business in existing market. Although Woolworths has strong market position, it needs to focus more on brand image rather than focussing merely on its sales. New product development in Woolworths strategy focuses in developing new products for existing markets so that it can focus and identify to develop superior products according to the needs of its customers. Market development strategies helps Woolworths to identify fresh markets and new customers for existing products. Woolworths plans to expands its business in diversified markets due to its higher reputation and sound marketing strategies. Diversification strategy involves entry of new products into fresh markets at the time of entry. This strategy of Woolworths is risk oriented from new product development point of view. Along with it, this strategy of Woolworths brings additional risk to product development strategy as there is little to no knowledge about new market and even about the product (Jawad, n.d.).
References
Benjaafar, S., Morin , T. . L. & Talavage, . J. . J., n.d. The strategic value of flexibility in sequential decision making. [Online]
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Omsa, S., Abdullah, I. H. & Jamali, H., 2017. Five Competitive Forces Model and the Implementation of Porter’s Generic Strategies to Gain Firm Performances. Science Journal of Business and Management, 05(01), pp. 09-16.
Chen, Z. . H., He, M. & Wong, K., 2013. A Case-based Analytical Study on the Strategic Evaluation of Common Equity Performance of SIA in a Global Organic Environment. Journal of Contemporary Management, pp. 51-62.
Gianos, J. F., 2013. A Brief Introduction to Ansoffian Theory and the Optimal Strategic Performance-positioning Matrix on Small Business (OSPP). Journal of Management Research , 05(02), pp. 107-118.
Gupta, A., 2013. Environment & PEST Analysis: An Approach to External Business Environment. International Journal of Modern Social Sciences, 02(01), pp. 34-43.
Helms, M. M. & Nixon, J., 2010. Exploring SWOT analysis – where are we now? : A review of academic research from the last decade. Journal of Strategy and Management, 03(01), pp. 215-251.
Jawad, n.d. Woolworths Case study. [Online]
Available at: https://www.scribd.com/document/247830803/Woolworths-Limited-docx
[Accessed 16 08 2018].
Khan, U. . A., Alam, M. . N. & Alam, S., 2015. A CRITICAL ANALYSIS OF INTERNAL AA critical analysis of Internal and External analysis of Apple Inc.. International Journal of Economics, Commerce and Management, 03(06), pp. 955-967.
Ritson, N., 2011. Strategic Management. s.l.:Ventus Publishing.
Smithson, N., 2017. PepsiCo Five Forces Analysis (Porter’s Model). [Online]
Available at: https://panmore.com/pepsico-five-forces-analysis-porters-model
[Accessed 16 08 2018].
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