SWOT Analysis
In contemporary organisations, managers are taking critical steps to expand their businesses in global marketplace by making products more attractive and through customer satisfaction (Ritson, 2011). To formulate business procedures and policies, companies develops and implements effective business tools to stay ahead of the game. According to Anna (2015), Organisational performance (OP) is a key factor associated with business models. However, implementation of appropriate tools at regular intervals of business course is necessary to get knowledge about firm’s position and future opportunities. After analysing four critical business development tools, this essay has been prepared to give a comprehensive overview of development tools along with providing practical examples.
SWOT analysis is an acronym for: Strengths, Weaknesses, Opportunities and Threats in business environment. SWOT analysis is a superior level strategic planning tool that assists organisations in identifying where they are doing and what are the future scope for improvement from external and internal perspectives. This tool is most commonly used at the beginning stage of organisations when strategic planning is made for future course of the business. This analysis tool helps in identifying organisations strengths and weaknesses to determine correct approach of business policies. By predicting opportunities and threats, this development tools helps organisations take decisions that can be applied in variety of business operations levels. Although SWOT was initially developed for industry and businesses, it has been immensely used by education, health and community level operations also (Gurel & Tat, 2017).
SWOT analysis of GlaxoSmithKline (GSK) pharmaceutical company in Australia will give a complete knowledge about how the company’s internal and external environment can be analysed through strategic development tools. Strengths that can be identified in GSK’s global manufacturing and supply network that focuses on innovative and developed research. Company has strong financial position in the market along with having diversified product portfolio. Weaknesses observed in the company are in its internal management systems where lack of managerial capabilities with lesser skills employees can be seen. Also, any failure in its product can hamper company’s overall reputation. Opportunity can be seen in GSK’s strong asset and cash position where it can enter into biologic and antibodies segment in market. However, threats like demographic change and higher expectations from people can affect company’s performance (GlaxoSmithKline Australia Pty Ltd., 2018).
PESTLE analysis, also known as PEST analysis, is strategic development tool that is associated with marketing principles of businesses. This development tool is utilised by companies to track macro environment they are operating in or during times when any new product or project is to be launched in the marketplace (Anna, 2015). PESTLE is an acronym for: Political, Economic, Social, Technological, Legal and Environmental factors. In simpler words, this tools act as a bird’s eye view for organisations to look through many angles while tracking business plans and operations. This tool not only examines current trends in business environment but also assist in setting future course of business according to the industry needs. Strategic planning made through PESTLE helps businesses gain competitive edge over others operating in similar industry through identification of various macro environmental factors (Gupta, 2013).
PESTEL Analysis
Analysing GlaxoSmithKline (GSK) through PESTLE analysis framework can reveal the marketing strategies developed by the company subjected to external and internal factors that gives shape to marketing environment for its pharmaceutical business. Politically, the company has to face constant pressure across the globe while following restrictions and strict policies for few medicinal drugs and remedies. Economic recession and countries GDP act as major contributors for downfall of world economics. Here, pharmaceutical company’s profitability is threatened due to increase in oil prices and frozen legislations. Socially, people are getting connected with each other through enhanced media tools (Nooraie, 2012). Earlier, people had no knowledge about pharma products but internet have changed things where every single person demands product details to get best products in cheaper price. Technological factors have vigorous impact on pharmaceutical industry as level of development and innovation have surpassed and to remain in the business, GSK have to make constant changes in its technologies to produce more advanced products. Environmental factors also have strong force over GSK as any ecological disruption can hamper business plans and products. Legal factors like country regulations and product licencing also impacts business operation of GSK (GSK Australia, 2016).
Porter’s Generic Strategies tool have three major strategic options that are available for organisations to gain competitive advantage over the others. Three factors include: Cost Leadership, Differentiation and Focus. Firms can achieve cost leadership benefits either by maintaining average product pricing or by gaining market share through effective pricing that can lead to increased profits. This factor is achievable only if costs are reduced below the level of business competitors in similar fields. Organisations that pursue differentiation strategy, wins market by offering exclusive features those are valued by consumers. Focus strategy involves gaining differentiation or cost leadership within the market niche in those ways that are not reachable by largely focussed business firms within similar industry ( Omsa, et al., 2017).
Nestle is a leading international company that deals in dairy and food products. In this growing competitive market, Nestle focuses on product differentiation strategy through market segmentation strategy. By providing wider range of products as per market needs, the company has acquired strong reputation. Looking at behavioural segment from customers point of view, the company introduced many diversified products like coffee, fresh dairy and baby food. This strategy of Nestle differentiates it in channel and distribution range also by making its product available to customers through market salesman and enhanced transportation facility. To run its business effectively, the company offers hot line service to ensure quality checking of services provided to its customers. This strategy has enabled Nestle gain superior position in dairy industry in Australia (Nestlé Oceania, 2014).
Developed by H. Igor Ansoff, this development tool is also titled as ‘Strategies for Diversification’. From ages, this tool is been used by organisations due to simplicity in use that allows companies think about growth and risks in industry. Four major segments covered in Ansoff matrix are: Market penetration, Product Development, Market Development and Diversification. Through Ansoff matrix, companies can focus on expansion of their business by getting a knowledge about products and their market position. Through product development evaluation, risk associated with the launch of fresh products can be acknowledged. Market development in Ansoff matrix relates to the firms position while launching existing products in new market whereas diversification strategy states launching totally new and unproven products in fresh market (Gianos, 2013).
Nestle works in global marketplace while dealing with variety of dairy and food products. The market penetration strategy of the company brings down their overall costs so that they can enter new market rapidly. It has been witnessed that Nestle has entered many developing countries like Pakistan with their existing products range and at reasonable prices. Market development strategies of Nestle takes its existing products into another business. For example, Nescafe Expresso was boosted in China’s market whereas KitKat was forced in remote markets. Product development in Nestle shows how the organisation stays in similar business while working beyond the extent of its product range. Nestle utilises this strategy to stay in present business to expand its business operations in diversified market through diversified product offering. Additionally, diversified portfolio of the company through making of investments in cosmetic and pharmaceutical companies shows its risk-oriented approach in diversification strategy (Nestle, 2004).
The above essay has analysed four important business development tools utilised by contemporary organisations to remain sustainable in their respective industries. SWOT, PESTLE, Ansoff matrix and Porter’s Generic strategies are the tools that provides benchmarking and methods of business analysis that offers organisations with evidences to understand the effects of strategic management tools and their utilisation to enhance organisational performance.
References
Anna, A., 2015. Strategic Management Tools and Techniques and Organizational Performance: Findings from the Czech Republic. Journal of Competitiveness , 07(03), pp. 19-36.
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.
GlaxoSmithKline Australia Pty Ltd., 2018. GlaxoSmithKline Australia: About Us. [Online]
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GSK Australia, 2016. Responsible Business Highlights Report : GSK Australia. [Online]
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Gupta, A., 2013. Environment & PEST Analysis: An Approach to External Business Environment. International Journal of Modern Social Sciences, 02(01), pp. 34-43.
Gurel, E. & Tat, M., 2017. SWOT Analysis: A Theoretical Review. The Journal of International Social Research, 10(51), pp. 994-1006.
Nestlé Oceania, 2014. Nestlé in Oceania: Creating Shared Value Report 2014. [Online]
Available at: https://www.nestle.com.au/creating-shared-value/documents/nco174%20nestle%20in%20society%20csv%20report%20web%20as%20at%20august%204%20(2).pdf
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Nestle, 2004. Nestlé Corporate Business Principles. [Online]
Available at: https://www.nestle.co.za/common/documents/about/nestle_corporate_business_principles.pdf
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Nooraie, M., 2012. Factors Influencing Strategic Decision-Making Processes. International Journal of Academic Research in Business and Social Sciences, 02(07), pp. 405-429.
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.
Ritson, N., 2011. Strategic Management. s.l.:Ventus Publishing.
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