How did this come about and what are the chances of revival and survival? The first answer lies in the loss of competitive advantage and poor management strategies. The second lies in radical turnarounds again based on new strategic planning.It is well established that companies devise strategies for competitive advantage (Porter M.E., 1985). He further elaborates that Competitive strategy is about being different and offering a unique product or service (Porter, M.E., 1996). It means intentionally selecting a different set of activities to deliver a unique mix of value. In manufacturing, the activities remain the same, but their priorities and linkages are planned and routed differently to develop a unique set of values to reduce cost as well as to improve quality. It is this difference that is not imitable by competition that sets the company apart from its rivals and delivers a competitive advantage. This is what the Japanese did to dethrone their arch-rivals, the US Automakers.The external environment of the company plays a major role in constructing a competitive strategy. A PESTEL analysis shows specifically what is likely to happen in the markets in which an organization operates. The Five Forces model (Porter M.E., 1985) is used for analyzing competition within a particular industry. Environments have a great impact on companies. The strategy is the reaction or response to these external and internal situations. Ansoff et al (1976) state that, amongst other things, responsiveness to the problems is what strategy is all about.PESTEL Analysis measures the market potential and situation. These are external environmental factors that are beyond the control of the Management but have a marked bearing on growth and strategy. PESTEL stands for Political, Economic, Socio-Cultural, Technological, Ecological, and Legal factors.POLITICAL factors cover Legislation andRegulation of transfer for capital and labor.
Ford Strategic Management