4.1.1 Models
Porter’s Five Forces Model
Description of Porter’s Five Forces Model
- Analyzes an industry’s structure and level of competition
- Five forces: Threat of New Entrants, Threat of Substitute Products or Services,
Bargaining Power of Customers, Bargaining Power of Suppliers, and Industry Rivalry
Application of Porter’s Five Forces Model
- Helps organizations identify strengths and weaknesses within the industry
- Develop strategies to enhance competitive position
- Strategies include differentiation, cost leadership, and focus strategy
When to use Porter’s Five Forces Model
- Before entering a new market
- In strategic planning process
Who can use Porter’s Five Forces Model
- Organizations of all sizes, from start-ups to large corporations, benefit from using Porter’s Five Forces
to evaluate market competitiveness and potential barriers
SWOT Analysis
Description of SWOT Analysis
- A strategic planning tool to identify Strengths, Weaknesses, Opportunities, and Threats
- Assesses internal and external factors affecting an organization’s ability to compete
Application of SWOT Analysis
A matrix for each category
- Strengths: Characteristics giving an advantage over others
- Weaknesses: Characteristics placing the team at a disadvantage
- Opportunities: Elements that could be exploited for advantage
- Threats: Elements that could cause trouble
When to use SWOT Analysis
- To get a clear picture of the current situation
- Great for launching a new product or entering a new market
Who can use SWOT Analysis
- Almost any organization, from small businesses to multinational corporations
Blue Ocean Strategy
Description of Blue Ocean Strategy
- Focuses on creating new market spaces “blue oceans“ rather than competing
in overcrowded industries “red oceans” - Involves innovating in ways that make competition irrelevant
Application of Blue Ocean Strategy
- Requires organizations to engage in value innovation
- Goal is to open up new space where organization can set rules
When to use Blue Ocean Strategy
- When supply exceeds demand in existing market
- When turnover has increased and profit margins are diminishing
Who can use Blue Ocean Strategy
- Organizations that might use Blue Ocean Strategy
- Startups, established firms, or non-profits
PEST and PESTLE Analysis
Description of PESTLE Analysis
- PESTLE analysis is a framework used to assess external macro-environmental factors
- PEST analysis evaluates Political, Economic, Social, and Technological factors affecting
a business or industry - PESTLE includes two additional factors: Legal and Environmental
- Helps identify potential opportunities and threats
Application of PESTLE Analysis
- Analyzing each factor in the PESTLE framework helps understand their impact on the organization’s operations
- Helps in crafting resilient and adaptable strategies
When to use of PESTLE Analysis
- During strategic planning, entering a new market, or launching a new product
Who can use of PESTLE Analysis
- Organizations that might use PEST Analysis: Businesses operating in rapidly changing environments
or subject to significant external shifts