SWOT, PESTEL, And 5F Analysis For Rhodes Island Automobile Distribution Freight Infrastructure Essay.

Write an essay of explaining the main strategy development tools and how they are used.

Organization’s growth rate depends on various factors such as availability of market, availability of stiff competitors, availability of raw materials, proper management, and many other factors (Chungyalpa & Bura 2015, p.76). However, a good strategic development plan is a roadmap that drives all the factors of production to maximum utilization. The development strategy is achieved after the analysis of the elements: a process called strategy analysis. Strategy is defined as the described way and how a particular objective is to be achieved, thus strategic analysis refers to the process of researching a specific environment of business to formulate a strategy (Al-Tabbaa, Leach & March 2014, p.660).  The strategy analysis is performed through various tools such as PESTEL, 5F, RBV, PROFIT, I/O, SWOT, and CIA and every organization employs tools that are relevant to the situation.  The paper explores specifically the usage of SWOT, PESTEL, and 5F giving practical examples with the Rhodes Island Automobile Distribution Freight Infrastructure.

Every business success lies in sound decisions made by the management, and the choices are always guided by the outcome of SWOT analysis (Ahmadi, Dileepan, & Wheatley 2016, p.3).  SWOT stands for strength, weakness, opportunities, and threats, thus refers to the process of evaluating the strengths, weakness and new ideas that the company should explore as it combats possible threats. William D. Book, Edmund P. Learned, Kenneth Andrews, and C.Ronald Christensen developed the SWOT analysis tool in 1960s. The analysis helps in mapping the future of the business, during exploring of new initiatives, revamping of internal policies or even during altering of policies in the middle of executions.

The first two components of SWOT analysis refers to the internal factors such as the financial, physical ,human ,natural and current resources. Strengths are the current factors that have made the organization to outstand the competitors in the market, for example, strong brand name while Weakness refers to the factors that hinder the development of the company such as inadequate capital (Al-Araki 2016, p.618). The last two components refer to the external factors that affect every facet of a company such as marketing trends, demographic suppliers, political environment and many others. The opportunities refer to the available opportunities for expansion, for example, the increasing demand of the specific product, while the threats refer to the risk factors that hinder the development of the organizations for example entry of a competitor.

SWOT Analysis

The first step of using SWOT analysis is the collection and evaluation of the fundamental data such as population, demographics, technology, and many others. The collected data is grouped accordingly under the four elements: the strengths, weakness, opportunity, and threats. After that, a matrix for the business alternatives are put under considerations, and then the proper decision is made. For example, the SWOT analysis of a Rhodes Island automobile freight infrastructure that supports the national and international distribution of automobiles will be as follows:

PESTEL analysis is a strategic tool used to analyze business planning and understand the external forces that drive up a business (Balasopoulou et al. 2016, p.1). These forces include trade barriers, demographic changes, tax changes, and many others. The word PESTEL represents Political, Economic, Social, Technological, Legal, and Environmental. A strategic business developer needs to understand these external environmental factors to maximize opportunities and limit the threats to an organization.

The 5 F refers to the Five Forces Model, developed by Michael Porter to analyze the industry and the risks (Yetkin 2013, p.463). The model comprises of five elements that are bargaining power of buyers, suppliers, entry of potential entrants, competition from established entrants, and substitutes. The bargaining power of buyers of the United Kingdom increased as a result of the increased number of automobile distributors such as the Autopark Wheel & Tyres. The high bargaining power shaped the behavior of the business to captures the possible number of customers. Substitutes are the alternative products offered by other companies to replace the existing product. The threat of substitute to the automobile distribution business is moderate as customers differ in taste-making RI to withstand. Rivalry among the existing firms such as Baltimore port that also distribute automobiles affects the operations of the Rhodes Island as parts of the market are accessed by the competitors. The availability of the potential entrants into the business of automobile distribution tends to reduce the market share of the Rhodes Island. Finally, buyers purchasing power affects the quantity of demand.

Conclusion

There are numerous strategy development tools, and the application of each depends on the organization and the objective of the analysis. However, the use of more than one tool such as SWOT and PEST provides better information’s, as the latter focus more on the environmental factors than the former.

List of References

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