Free Company Analysis Tools Essay Sample
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This company in its industrial environment has a need to analyze itself in order for it to understand who they are in the industry and their competitors. While analyzing a company, various analytical tools and methods are applied which are usually the key to enhance consistency and appropriate considerations are applied to the analysis. The tools and methods applied must be helpful in answering the organizations questions and provide solutions to the problems. The benefit of these tools mostly emanate from the collaboration and input from other functions and people thus the need to give early warning so that the organization can easily accommodate this analysis, since sufficient time is required to conduct the collaboration. Since proper tools consume time the stake holder must be aware of this to enhance the provision of necessary commitments of the analysis, which needs to, define clearly to make it actionable. Therefore, the analytical tools play a vital role by sharpening and focusing the analysis applied by the company to ensure the attainment of a balanced approach. Caution must be exercised as these tools are vested on the historical data in trying to extrapolate the future assumptions to avoid unduly influence by preconceptions, thus; the key skill is to understand the most essential tool to apply to the analysis goal. This paper will analyze two analytical tools that are usually applied by organizations to in order for them to acquire a competitive advantage over their rivals in a competitive environment.
SWOT is the most widely used tool in the analysis of an organization. It helps in the understanding of the strengths, weaknesses, opportunities, and threats that encompass a business activity. The SWOT analysis defines the business activities and identifies both the internal and the external factors that affect business activities, and are most beneficial in enhancing the achievement of the business objectives. The strengths and weaknesses in a business environment are classified as the company’s internal factor, while the external factors are depicted by the opportunities, and threats (SWOT & TOWS).
When using the SWOT analysis it is only the verifiable and the moss specific statements that need to be used like the pricing of the company’s products in relation to those of competitors which prove to be appropriate than the real value of money. The internal and external factors must be prioritized because sufficient time is required to concentrate efforts to the factors that are more significant to the analysis. The risk assessment should be taken on account as they ensure that the high risk and low impact opportunities and threats are identified clearly and priority is accorded to them in an orderly manner. The analysis is mostly centered on the business activity to provide the achievement of competitive advantage to the company. The issues identified in the analysis are usually retained as they will be used in future strategy formulation process (Downey).
SWOT Analysis Diagram
Determine what the organization do better than other
Determine the unique selling points of the company
Determine the factors that are perceived by competitors and consumers in the market as the company’s strength
Know the company’s competitive edge.
Determine whether the political, economic, social- cultural and technological changes do favor the business environment.
Determine the unsatisfied customer needs and the emerging new markets.
Determine new innovations that the company can introduce to the existing markets
Determine what the company’s competitors are better off than the company.
Determine the elements in the business that perceived as adding little or no value to the company.
Determine the factor that is perceived as the company’s weakness by competitors and consumers in the market.
Determines the unfavorable political, social-cultural, economic and technological changes.
Determine the negative impacts that the company is faced by competition in the market.
Determine the factors that restrain the company in the business environment.
TESCO SWOT Analysis
TESCO is the largest retailer in the UK has derived it competitive advantage over other retailers by the strength of its physical stores and the growth of the online store. The number of its stores and the variety of products it providers have secured the company to acquire a competitive advantage over it rivals. The large number of the company’s stores ensures the company serves a large market thus implementing this strength to increase its market. The greatest threat of this company is the existence of its rivals who have also established online store and thus TESCO needs to analyze this threat for it to maintain the competitive advantage (Coriolis). The company is also faced with weakness due to the separation of its stores based on the service they provide thus lowering the average revenues of the company as a division failure to be profitable has to be supported by other divisions.
Porter’s Five Forces Analysis
The porter’s five forces analysis was developed as a framework to assess a company’s strengths and position in a business environment. It is based on the concept of five basic factors that determine the intensity and competitiveness of a business in a market environment, thus identifying the business power (Slack, Johnson and Stuart). This analysis helps a company to understand its strength and competitive position at present and the direction the company looks in future. This strategy also helps in determining whether new products in the market have the potential of profitability and acceptance by the target market. The identification of the company’s power helps to in the identification of strength that improves the company’s weaknesses. The forces that are focused on this analysis include; supplier power, buyer power, competitive rivalry, substitution threat and new entrants’ threat.
Supplier power is critical in analyzing business competitiveness as the suppliers are the determinants of the prices of the company’s products. The company hence needs to determine the number of suppliers of the different inputs that are essential in business activities and, the relative size of the supplier and their strengths. This helps the company to determine on whether to retain the suppliers or not and whether there is other who could provide the inputs at a relatively lower price. The company also determines how its product is unique in the market so that it can retain the existing supplier. This analysis also helps the company to determine the cost of suppliers switching (Grant).
The buyer power is an assessment that helps the company to determine the effects of buyers in driving the products prices down. This analysis helps the company to determine the number of buyers in a particular target market and the role and the importance of each individual to the company. It also analyzes the cost buyer shifting from one supplier to another.
Competitive rivalry determines the number of competitor in the market and their capability to offer differentiated products in the market as market attractiveness is driven by the provision of differentiated products.
Threat of substitution is where there are products in the market that are substitute to the company’s products. These substitutes enhance the consumer switching to the in response to changes in prices thus; they reduce the power of suppliers and attractiveness of the market.
Entrance of new players in the business environment has the tendency of reducing the profitability of the existing players as the market attractiveness attracts them to this segment. Only strong barrier to entry that hinders the entrance of these new players in the industry namely; capital requirement, government protection, patents among others.
Porter’s Five Forces Diagram
Threats of substitution
Buyer switching cost
Buyers propensity to substitute
Number of buyers
Sensitivity to prices of buyers
The leverage of bargaining
New entrant threat
The economies of scale
The learning curve
The cost of switching
Carrefour’s Porter’s Five Forces Analysis
The French retail giant Carrefour has aggressively moved to the UAE retailing food and non-food products opening more locations across the Middle East. The company has derived its competitive advantage from offering low prices to its customers and providing all of its products under one roof. It uses the concept moa Porter’s Five Forces in determining the market intensity and its attractiveness (Lane).
These forces in a company provide the ability of Carrefour to serve all the needs of its customers and in the process making profit. The company analyzed its competitors, the buyers and suppliers and barriers to the gulf regions and positioned its self to exploit the existing market.