Integrative and Analytical Tools

Tools of Market Analysis

Name

Institution

Introduction

Several forces influence success in business. The factors are both internal and external, and thus they determine the extent to which the business successfully operates. Business organizations must manage such forces by implementing appropriate strategies. Company marketing and planning teams are tasked with providing approaches to the operations of the business to meet its objectives. Strategic management studies aim at analysing the market and formulating a plan to guide the company towards success. For instance, there are various tools utilized in the market analysis.

PEST Analysis

PEST is an acronym that refers to political, economic, social and technological factors. Political factors are associated with systems of governance and regulation of businesses through legislation. Besides, political stability also influences firms and thus it is a critical factor. On the other hand, the economic status of a nation predicts the consumer habits. A stable economy is characterized by individuals who can provide a market for goods and products despite their prices. The social status also affects market dynamics and business ventures. Consequently, social ties influence the relations that exist between the business and the people. For example, culture is an essential element of a society that determines their consumption habits. Finally, technology is associated with machines and equipment for supporting a given business venture. Appropriate technology is always a desired factor in the establishment of a stable and prosperous enterprise.

PEST analysis provides for requirements for setting up a business. The approach is essential in determining societal elements such as culture, age, gender rules and regulations for setting up a given company.

Porters Five Forces

The forces include supplier bargaining power, buyer bargaining power, the threat of new entrants, the threat of substitutes, and competitive rivalry.

Supplier power

Refers to how suppliers manipulate prices. The prices are related to the provision of raw materials and parts for devices such as the mobile phone. Each unique characteristic of a product/service stems from the supplier, and thus the supplier is a significant determinant of the price of a given Product/service.

Buyer bargaining power

It Refers to the influence of buyers on sales of a product form a given company. The number of buyers within the market determines the bargaining power. Therefore, the cost attached to each buyer and their nature of switching between products is a considerate factor. If there is a massive number of buyers with few competitors, then the supplier or company can stipulate and dictate prices on its own.

Competitive rivalry

It is a measure of competition posed by close substitute products in the market. With much suppliers with varied prices and qualities, there are high rates of competitive rivalry in the phone industry.

Threat of substitutes

There is a likelihood of identifying products with similar features and application within the market. The products are referred to as substitutes because they are identical in functionality. Such products are central when it comes to competition, and thus they must be precisely assessed before a conventional product is introduced or manufactured by a company.

Threat/Force of new entry

As a business and an industry become profitable, there is the attraction of unique individuals. Therefore, the new entrants erode and reduce profits of pioneer firms. Such occurrences are common especially in innovative industries with diversity.

Advantages of the Tools

The mentioned tools offer a structural analysis of a business with the aim of identifying critical areas that may hinder or support a given business opportunity. For instance, the PEST analysis is essential in the interpretation of the operating environmental conditions in a given market within a geographical region.

Porters five forces highlight and outline the factors within the operating environment thus they are essential in identifying competitors and alternative ways that can be utilized in alleviating give problems with the environment.

Uses of the Tools

· Market analysis.

· Cost determination

· Niche identification

· Studying consumer patterns

· Understanding rules and regulations.

References

E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.

Peng, G. C., & Nunes, M. (2007). Using PEST analysis as a tool for refining and focusing contexts for information systems research.