Pestel Analysis

Question 1

Explanation on the three tests suggested by Johnson and Scholes for evaluating strategic option

In evaluating strategic options, it has been evident that the following steps have to be followed which include suitability, feasibility and acceptability tests for evaluating strategic options. This helps in adopting the proper strategic options for firms and organizations. The test and the models is especially important because the environment in which the organizations operate and the company needs to adopt and formulate new strategies in managing these varied situations (Tsiakkiros and Pashiardis, 2002). In this regards Johns and Scholes have stated that based on the strategic positioning, possible strategy choices are made. In

The PESTEL analysis needs to help in determining the external environment prevalent in the geographical area. This reveals about the political scenario prevalent and the policies, regulations and motive that it has to promote the particular type of business and organization. The economic factors determine whether the area will be able to sustain the product and will portray the usefulness of the strategy in this regard. The social factors are also important factors in evaluating suitability of the strategy. Technological and environmental factors also require to be estimated while determining suitability of the strategies. It portrays that whether the environment of the geographic area is able to support the policies and strategies taken by the firm. In determining the suitability of the strategies taken, Porters five forces play an important role in determining suitability of the strategies under taken by the organizations (Senaratne and Wijesiri, 2008). The porters diamond also help in determining the suitability of the strategies undertaken or chosen. If the strategies are not suitable then it leads to failure in the strategy planning and ultimately result in loss for the organization. Moreover it can be stated that the each strategic choices have their unique advantages and disadvantages and it is

The threat of a substitute product is that risk faced by corporate houses from replacement by its substitute. Any product can have several other substitutes in the market that may provide the customer with more utility. The competition faced by a company in selling its product from its counterpart selling its substitute comprises the threat of substitute. This is one of the potential risks that are faced by the organizations that affect their competitive structure and survivability in the