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Expectations and influence of stakeholders

Key strategic models

A number of models have been developed to help with strategic analysis

SWOT analysis

SWOT analysis can be used as an analysis tool in its own right or can be used as a summary sheet on which other results can be placed.

  • Strengths and weaknesses relate to resources and capabilities: what is the organisation good at? What is it poor at? Where are resources in short supply? Where are resources excellent?
  • Opportunities and strengths relate to external factors: what will the effect on the organisation be of economic changes? Can the organisation make use of new technologies? Are new entrants likely to enter the market place? Can a powerful customer dictate terms?

External environmental analysis

As well as thinking in terms of opportunities and threats, the following tools can be used to analyse the external environment:

PEST analysis

PEST analysis looks at the environment under the headings

  • Political / legal factors
  • Economic factors
  • Social / cultural factors
  • technological factors

A PEST analysis is particularly useful for identifying the drivers of change to identify growth opportunities and sources of risk.

Porter’s five forces model

Just because a market is growing, it does not necessarily mean that a firm can be profitable in that market. Porter identified five forces that, collectively, determine the profit potential in an industry:

  • competitive rivalry
  • threat of new entrants
  • threat from substitutes
  • power of customers
  • power of suppliers

Porter’s diamond model

Porter tried to answer the following questions:

  • Why does a nation become the home base for successful international competitors in an industry? 
  • Why are firms based in a particular nation able to create and sustain competitive advantage against the world’s best competitors in a particular field?
  • Why is one country often the home of so many of an industry’s world leaders?

Porter called the answers to these questions the determinants of national competitive advantage. He suggested that there are four main factors which determine national competitive advantage and expressed them in the form of a diamon