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Business Strategy and Strategic Management
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Table of Contents
Introduction ................................................................................................................................ 3
1. Strategic Management Tool or Framework ........................................................................... 3
1.1. Application of the PESTLE Analysis ............................................................................. 5
1.1.1. Political Factors ....................................................................................................... 5
1.1.2. Economic Factors..................................................................................................... 5
1.1.3. Social Factors ........................................................................................................... 6
1.1.4. Technology Factors .................................................................................................. 7
1.1.5. Legal Factors ............................................................................................................ 7
1.1.6. Environmental Factors ............................................................................................. 8
1.2. Strength and Limitation of the PESTLE Analysis .......................................................... 8
1.3. Recommendations for Improvement............................................................................... 9
2. The Concepts of the Three Prescriptive Schools of Strategy by Henry Mintzberg ............... 9
2.1. The Fist Concept of Prescriptive Schools of Strategy as Planning School................... 11
2.2. The Second Concept of Prescriptive Schools of Strategy as Design School ................ 12
2.3. The Third Concept of Prescriptive Schools of Strategy as Positioning School ............ 14
Conclusion ............................................................................................................................... 15
References ................................................................................................................................ 16
Figure 1: PESTLE Analysis ....................................................................................................... 4
Figure 2: 10 School of thought by Henry Mintzberg ................................................................. 9
Figure 3: Evolution of the 10 School of Strategy .................................................................... 10
Figure 4: Design of School of Strategy.................................................................................... 13
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Introduction
In the present competitive and global business world, all the business firms require innovative
strategies to improve their performances and develop a competitive position. The strategic
management has become the essential part of the business environment. Srdjevic, et al.,
(2012) mentioned that in the business environment, every organisation has some specific
goals and objectives and wants to achieve them in future. The concept of the strategic
management is significantly applied in each sector of the business world, which assist the
firm to develop and implement different types of strategies to attain the goals and objectives.
The field of strategic management is important to understand the environmental situation in
which the company operates its business and to identify unique strategic and tactical
approaches, so that the environment changes can be managed and the firm would continue to
attain its mission and objectives (Wheelen and Hunger, 2011).
The main purpose of this report is to present a critical evaluation of the strategic management
tool or framework and the work of Henry Mintzberg. In the first part of this report, PESTLE
analysis is discussed as a strategic management tool. It is one of the most popular and
significant strategic framework. It also involves the application of each factor of PESTLE
analysis. At the same time, this report also identifies the strengths and weaknesses of the
PESTLE analysis and provides the recommendation. In the second part of this report, the
concept of three perspective schools of strategy given by Henry Mintzberg is critically
discussed. It enhances the knowledge of the planning school, design school and positioning
school that are the parts of the prescriptive schools of strategy (Rothaermel, 2015).
1. Strategic Management Tool or Framework
The strategic management tool and framework helps the organisations to understand the
environment in which they are operating (Keupp, et al. 2012). They enable the organisation
to develop a plan according to requirements and firm's goals and objectives. It is asserted by
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Koumparoulis (2013) that the strategic management tools allow the organizations to ignore
the potential problems in the market and achieve the competitive advantage. In the strategic
management, PESTLE is a well-known strategic management tool that is helpful to analysis
external business environment in which the company operates. This tool evaluates the
political, economic, social, technological, legal and environmental factors of the external
environment, which shapes the strategic practices of a firm in a drastic manner.
In support of this, Mosadeghrad (2012) exhibits that PESTLE analysis gives an overview of
all the situations. It is an acronym form, where each letter indicates to certain factor. These
factors influence industry or organisation in many ways. In the PESTLE analysis, P denotes
to political factors while E denotes to economic factors. S stands for social factors, and T
indicates to the sum of the technology factors. L refers to the legal factor in the country, and
another E indicates to environmental aspects.
Figure 1: PESTLE Analysis
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1.1. Application of the PESTLE Analysis
In the words of Jacobs, et al. (2012), the application of the PESTLE analysis gives the
knowledge of the various external factors of the business environment that affect the
operation of the industry. The organisations apply the PESTLE analysis to develop a business
plan. The application of this tool is important when an organisation wants to start operation in
a new country. Further, it provides depth information about the country in the context of the
external business environment.
1.1.1. Political Factors
In the views of Frynas and Mellahi (2015), political factor is the first element of the PESTLE
analysis that is about the government intervenes in the economy. The political factor concerns
the political stability or instability in the country, government policy, foreign trade policy,
labour law and environmental law, trade restriction and taxation policies, etc., wichcannot be
controlled by the business organizations but they must follow. In support of this, Babatunde
and Adebisi (2012) highlight that political factor has a great impact on organisations. In the
context of the political factor, each company should measure all the factors effectively. Along
with this, the company should evaluate the current and future political situation in order to
develop business strategy through proper support of governmental policies and strategies. For
example, Australian political environment is liberal, which is supportive for the growth and
development of business organization and support international firms to operate in the
country.
1.1.2. Economic Factors
Yek (2014) defines that economic factor deeply affects an organisation's business activity.
The applications of the economic factors include the interest rate, GDP, CPI, economic
growth, inflation, exchange rate and per capita income, etc. The sub-factors of the economic
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factor can be classified into micro and macro-economic factors. Further, Rothaermel (2015)
said that the economic factor demonstrates the economic performance of a country and its
impact on the company and industry. For example, an increase in the inflation rate of the
country will affect the industry’s product and service prices. Additionally, economic
conditions, monetary policies and fiscal policies also play important role in affecting the
demand of products and services by influencing money availability and disposable income.
At the same time, economic environment has a drastic impact on the buying behaviour of
consumers. Emerging and developed countries like China, India, the UK, the USA, due to
having strong economies, the consumes have a high purchasing power and the firms have
opportunities to get more profits.
1.1.3. Social Factors
According to Ho (2014), social factor is also known as the social culture factor. This factor
covers a significant area, which involves the belief and attitude of the peoples. The social
factor in the PESTLE analysis focuses on the age distribution, population growth, career
attitude and health consciousness, etc. These factors affect the business of an organisation
because these are associated with consumer behaviours. In regard of this, Srdjevic, et al.,
(2012) define that social factors have a great impact on the business...