Strategic Management Tools for Financial-myassignmenthelp.com

Question: Discuss about theStrategic Management Tools for Financial and Knowledge. Answer: Introduction Management plays a pivotal role in the success of any business. This includes management of financial, knowledge, strategic and human resources (Hitt, Ireland Hoskisson, 2012). Through the entire business process, marketers use various strategy development tools which are aimed at assisting organizations in enhancing productivity and attain a deepened insight about their environment. This includes the companys internal as well as external environment. Various organizations have been known to apply these tools in order to gain a competitive advantage in their industry of operation (David, 2011). This report throws light on three of most widely used and renowned strategic tools that have proven to be highly effective in ensuring business efficiency. PESTLE The first tool discussed is PESTLE analysis. PESTLE stands for Political, Economic, Socio-cultural, Technological, and Legal and Environmental analysis. As the name suggests, through this tool, marketers aim to analyse various factors that directly or indirectly impact the organization (Hill, Jones Schilling, 2014). This study enhances an organizations insight about various factors that affect the growth and development of the business. For example, a PESTLE analysis of McDonalds in Asia would include the following details: Political Political stability of Asian countries provides a smooth entry to McDonalds. The policies enforced by every country largely impact McDonalds and its business model. Economic Economically, leading countries of Asia are developing. They are facing balanced inflation and the purchasing power of consumers is on a rise. The large population of China and India is a massive potential market for McDonalds. Therefore, this makes a good opportunity for McDonalds to create its demand within the Asian subcontinent. Socio-cultural India is a Hindu dominated country and hence McDonalds has changed its menu and introduced vegetarian options. On the other hand, spice consumption of China is much lesser; hence the menu has been customized as per their needs. Health consciousness among people in also increasing and hence people are switching to low calorie snacking options. Therefore, McDonalds must introduce healthy meals, multigrain bun burgers and gluten free as well as vegan products. Technological Increasing usage of internet and advancement of technology has resulted in McDonalds developing its mobile application through which people can place orders and get food delivered at their doorstep. This has increased customer convenience and led to increased demand. Legal Laws pertaining food quality, safety and hygiene at restaurants are getting stricter in every country. Therefore McDonalds would have to ensure that the brand abides to these laws effectively to avoid business slow down. McDonalds had to shut over 300 stores in India due to inability to meet food safety standards. Environmental McDonalds need to adhere to environmental standards of the country that it operates in. This involves reduced use of plastic and competent waste management systems in place. Porters five force model Porters five force model is a crucial tool in analysing competition that is faced by any organization in an industry (Eden Ackermann, 2013). This model helps in gaining insight upon five factors that collectively determine the level of competition within the industry. It provides a real picture to marketers in order to keep them on foot regarding the existing competition. For example, Porters five force model for Qantas Airlines would include the following details. Bargaining power of suppliers There are a number of suppliers supplying to Qantas airlines. The airline has not signed any long term contracts with either of the suppliers therefore the bargaining power of these suppliers is very less as the airline can switch suppliers with little additional cost. Bargaining power of buyers Bargaining power of buyers on the other hand is moderate. The buyer cannot refuse to pay the fare charged by the airline and the demand for the airline is also higher. But the increasing competition in the industry allows buyer to switch from one airline to another with no additional cost. Threat of new entrants The cost of starting an airline brand is much higher and therefore the threat of new entrant within the industry is really low. Threat of substitution The threat of substitution faced by Qantas Airline is also much lesser as alternative sources of commuting like road and railways are far more time consuming than airlines. Competitive rivalry The level of competition in the Airline Industry in Australia is really high. There are numerous airlines that have been active in the industry since long and there Qantas Airline would have to put efforts in gaining a competitive advantage in order to survive the competition (Kotler, 2015). Porters five force model is crucial in helping organizations understand the level of competition that currently exists within the industry and the level of competition that may arise in the near future. This analysis helps organizations in ensuring that they put sufficient efforts in differentiating themselves from the competitors and gaining an advantage over them in the industry. SWOT analysis SWOT analysis is the most basic strategic management tool used by various organizations to gain a deeper insight about their internal and external environment (Wilson Gilligan, 2012). SWOT stands for strengths, weaknesses, opportunities and threats. Strengths and weaknesses of the organizations internal environment as well as opportunities and threats existing in the organizations external environment are discussed through this tool. This tool helps organizations in identifying the rooms for improvements that exist within the organization as well as the opportunities that can be leveraged by the organization (Lee Carter, 2011). This activity also helps businesses in being aware as well as prepared for the threats posed to the business. For example, SWOT analysis of The Apple Inc. would be as below: Strengths The biggest strengths of The Apple Inc. is the organizations strong brand value and fierce customer loyalty. Apply consumers are rarely seen shifting to another brand which ensures repeat sales for the organization (Coget, 2011). Apples premium targeting is also its strengths and has helped the organization set the right positioning in the minds of consumers. Weaknesses One of the major weakness of The Apple Inc. is the premium pricing strategy adopted by the brand. The products are priced much higher than competing brands and hence the organization loses out of various potential consumers. The technology giant also has a relatively less number of service centres which adversely impact customer service time. Opportunities Expanding into new markets is an opportunity that Apple must leverage. The brand must also open more service centres across the globe to ensure increased customer satisfaction. Threats The increasing competition from other brands like Samsung, Motorola and HTC is posing a threat to The Apple Inc. as they are also introducing high end models to target premium customers of the industry. Moreover, the brand is also facing fierce price competition from Chinese brands like MI, Gionee and Xiaomi which are introducing excelling quality smartphones at dirt cheap prices. Conclusion Strategic management tools help marketers in getting a 360 degree picture of the industry that they operate in. These tools also helps organizations in gaining a deeper insight about how they can differentiate their products and services to fetch an advantage over their competitors (Armstrong, Kotler, Harker Brennan, 2015). SWOT, PESTLE and Porters five force analysis collectively provide an organization with sufficient detail about intricacies of its internal and external environment. They have been in use since a long time and continue to guide leading organizations of the world through effective strategic management. References Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015.Marketing: an introduction. Pearson Education. Coget, J.F., 2011. The Apple Store Effect: Does Organizational Identification Trickle Down to Customers?.The Academy of Management Perspectives,25(1), pp.94-95. David, F.R., 2011.Strategic management: Concepts and cases. Peaeson/Prentice Hall. Eden, C. and Ackermann, F., 2013.Making strategy: The journey of strategic management. Sage. Hill, C.W., Jones, G.R. and Schilling, M.A., 2014.Strategic management: theory: an integrated approach. Cengage Learning. United States. Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012.Strategic management cases: competitiveness and globalization. Cengage Learning. United States. Kotler, P., 2015.Framework for marketing management. Pearson Education India. Lee, K. and Carter, S., 2011. Global marketing management.Strategic Direction,27(1). Wilson, R.M. and Gilligan, C., 2012.Strategic marketing management. Routledge.