There are different strategies that businesses may use to determine their effectiveness in penetrating foreign markets. Proper planning is essential in the process since it helps firms make prior decisions, evading marketing problems that arise in the extension process. The SWOT, PEST, and PORTER analyses are some of the most efficient strategies businesses may use to determine the nature of the industry they operate in and how they should penetrate the international market. These aspects provide an analysis of areas businesses must focus on to ensure a positive transition into the new market. The impact of these factors on a company determines its success and aids in adaptation to the new target market.
I believe the tools we selected will function efficiently for a global strategy for different reasons. First, the SWOT analysis helps the organization familiarize itself with its operations based on its strengths, weaknesses, opportunities, and threats, forcing the company to formulate measures to articulate its strengths while improving on weaknesses. The SWOT analysis creates an opportunity for companies to focus on the global market by identifying the underlying characteristics of the industry and areas that require more attention to improve the brand image and access competitive advantage (Hajizadeh, 2019). SWOT analysis provides clear information on the business’s threats, such as competition from rival firms. Therefore, SWOT analysis is critical for evaluating business performance and understanding the market structure hence helping in analyzing the outcome of the business in the external market.
PEST analysis is critical for businesses planning to extend their operations to the international market. The PEST analysis evaluates the factors that affect the business internally and externally. The analysis determines the impact of the political, economic, social, and technological factors and their influence on business operations and performance (Cox, 2021). The political outlook of many countries determines business interactions in the regions. The government is responsible for setting market standards by creating laws that govern business operations within the boundaries. On the other hand, the economic conditions of a country influence the investor’s spirit and motivation. Excellent economic conditions attract more investors into the local market hence increasing competition. The level of customer interactions, such as societal beliefs, helps businesses decide on areas to focus on to meet the objectives. Moreover, the level of technology that businesses access determines their progress by influencing the quality of products and the quantity they produce. PEST analysis is vital in establishing means businesses may use to reach the external market.
Additionally, PORTER’s strategy addresses the primary concerns of businesses aiming to extend operations into the international market. The method examines the impact of five key contributors to the business’s success. The main factors that PORTER’s strategy examines five factors including customers, suppliers, competitors, the threat of substitution, and new entries (Goyal, 2020). The consumer’s power determines how much the company should charge customers for its products. It affects the demand and supply for the products due to its effects on consumer preferences and choices. Conversely, the supplier’s power evaluates the ability of the suppliers to influence performance. It scrutinizes the prices of resources in different regions. Businesses aim at minimizing expenses while expounding on the profit that they make. Thus, many manage to control suppliers’ power and ascertain that the businesses do not crumble due to a mighty one. PORTWR’s strategy aims at understanding the threats that the business is likely to face from substitution and new entry businesses that affect its general performance. Hence, the model primarily contributes to the decision-making process when expanding brands into international markets.
John and Deborah’s Company Extension Plan
John and Deborah’s corporation is a large custom furniture manufacturer in Boston, MA. From a SWOT analysis of the company details, it is notable that the company has its main strengths, including an entitled brand image due to its quality customer service and superior product quality, and a robust brand image due to its customer line. In addition, the company has an immense vertical integration that allows people to interact, making effective communication. The company’s opportunity lies in its extension to other countries, whereas the main threat is increasing competition from other firms.
The PEST analysis indicates that John and Deborah’s company’s political, economic, social, and technological progress was cheerful. The company has ten manufacturing and distribution plants facilitating operations in 48 states. Notably, the company’s progress through the states indicates that they have an immense understanding of the political outlook within the states since they must understand the manufacturing and shipping laws within the identified states. On the other hand, the economy supported John and Deborah’s company’s performance since most of its target customers were medium-income earners who afford the commodities at a relatively higher price. The firm had excellent interactions with the customers and the community in the formation of green gardens hence indicating its support for sustainability. The company engages in online trading, indicating its awareness and engagement in business operations. Therefore, the PEST analysis is a critical tool in examining the business environment locally and internationally and indicates the interaction between the business and other pillars of the surroundings.
PORTER’s analysis examines five leading factors that affect business performance. These factors comprise customer power, supplier power, the threat of substitution, threats by new brands, and competition by rivalry. John and Deborah’s company is aware of the conditions revolving around these factors. They know the customers they serve have a consuming power for relatively highly-priced items since they are middle-class earners. However, a section of low-income earners is interested in consuming similar commodities at lower prices. Moreover, the company is aware of the existing supplier power after the entry of firms to provide the products at lower prices hence creating competition. The rival companies access the products at lower prices, interfering with an underlying opportunity for John and Deborah’s company to sell their products to low-income earners. PORTER’s analysis indicates that the threats of substitution and threat of new entry rivals for John and Deborah’s company became intense; hence it has to generate new extensive ideas such as proper marketing and market research. PORTER’s analysis significantly helps in understanding the external market structure, hence aiding in creating more unique ideas.
Businesses require frequent market analysis programs to examine their participation in the industry. The research uses different tools such as the SWOT, PEST, and PORTER analyses to determine the business’s experience and the conditions surrounding its market. The strategies indicate critical points for the business and aid decision-making, especially in brand extensions and protection from rival firms. John and Deborah’s company must use these factors before expanding to international markets to create an extensive plan on the approaches to use and approve success.
Cox, J. (2021). The higher education environment driving academic library strategy: A political, economic, social and technological (PEST) analysis. The Journal of Academic Librarianship, 47(1), 102219.
Goyal, A. (2020). A critical analysis of Porter’s 5 forces model of competitive advantage. Goyal, A.(2021). A Critical Analysis of Porter’s, 5.
Hajizadeh, Y. (2019). Machine learning in oil and gas; a SWOT analysis approach. Journal of Petroleum Science and Engineering, 176, 661-663.