The internal and external environment of business firms using different analytical tools
This Assignment assesses CLO 1:
CLO1: Critically analyze the internal and external environment of business firms using different
analytical tools (SWOT analysis, TOWS analysis Porter’s 5 Forces, Steeple-Pest analysis and CAPM)
Prepare Strategic Audit Report of the following Companies: Rubric for grading is attached.
Team Text book Case
Andrews TOMS
Baldwin Burger King
Digby
Chester
Please Note the following special instructions:
1. The groups should check their submission in Turnit-in in Moodle to prevent plagiarism.
2. The typed report should not exceed five pages (A4 size) single line space (excluding Appendix
which contains tables). For every additional page of text, 2 marks will be deducted.
3. Please ensure the report is free from mistakes in spellings, communication, grammar etc., to
avoid further deductions indicated in the rubric.
Solution
Introduction
Business environment encompass various factors that impact a positive or negative effect
on the enterprise. The term is defined as the internal, external, and institutional influences that
are beyond the management of an individual. The external factors affecting the business environ
includes; fiscal environment, political or legal factors, technological, and social environment. On
the other hand, internal elements affecting a business enterprise encompasses of organization’s
employees, shareholders, the organization culture, and structure. However, for a business to
thrive well the management should incorporate and make use of external and internal business
environment analysis tools to analyze the functioning of the enterprise to maximize profits.
Business environment analysis tools enhance the company to identify the potential threats,
opportunities, weaknesses, and strengths within and outside the enterprise. The paper critically
analyses the internal and external business environment for TOM’S Shoes company using
various business environment analysis tools such as; Strength, Weaknesses, Opportunities, and
Threats (SWOT), Threats, Opportunities, Weaknesses, and Strengths (TOWS), Porter’s Five
Forces, Capital Asset Pricing Model (CAPM), and Steeple-Pest.
TOM’S SHOES COMPANY
Tom’s Shoes organization was founded by Blake Mucoskie in California. The
organization deals with men’s, women, children shoes, and eyewear. The organization is
a private owned and a profit based organizations that incorporate a strategic marketing
system to deliver quality products to the customers. According to Goworek et al. (2016,
p. 56) “, One for One “, strategy enhance the company to help the poor children with a
pair of shoes when a customer purchase a single pair. The organization utilize a
community outreach program to differentiate itself from its competitors, where one
customer on purchasing a single pair of shoes contributes towards the donating a pair of
shoes to one needy child in over seventy nations. Tom’s Shoes work in conjunction with
various donation organizations in their existing strategy.
Strategic Planning for TOM’S Shoes
Strategic planning is the process of establishing and documenting a direction of an
organization by assessing the current situation and the direction the organization is
heading. Strategic planning provides a platform for an organization to record vision,
mission, and values, as well as long term actions and goals towards use to reach the set
plans.
VISIONS: Mission Values Strategies
To take
obligation of
providing for the
comfort of
children in
underprivileged
regions globally
For every pair of
shoes purchased
retail or online, the
organization will
provide a pair of
shoes to child in
need, “One for One”
(Kreutzer, (2019, p.
44).
A caring
heart
Kind
Honest
consisten
cy
To launch the strategy
for “One Day without
Shoes” to raise the
awareness for the needy
children
To publicize the One for
One campaign to attract
more customers globally
Extending the one for
one model to all other
TOM’S SHOES COMPANY 3
company products even
the eyewear
Utilization of current
social media platforms to
market the marketing
concept globally
To open up more
branches and retail
outlets through a
strategic financial
agreements and help
from the donors
andcreditors.
Table 1: Strategic Management for Tom’s Shoes
Internal and External Analysis
According to Hunger and Wheelen, (2001, p.67), after a carefully analysis of the
business environment, an organization may want to refine various factors using an
External Strategic Analysis Summary (EFAS) and Internal Strategic Analysis Summary
(IFAS). The tables below show ratings EFAS and IFAS for Tom’s Shoes Company.
Internal Strategic Factors Weight Rating Weighted
Score
Comments
Strengths
S1. Have a low-priced production 0.01 2.0 0.98 Poor quality
shoes
S2. Global Brand
0.45 2.0 0.9 Questionable
S3. “One for One” model to help the
poor
0.15 5.1 0.255
Globally
recognized
S4. Targets the large populace aged
between 16-35 year
0.040 4.0 0.2 More profits
S5.Extension of production line to
Eyewear
0.175 3.3 0.7 Poor marketing
model
Weaknesses
TOM’S SHOES COMPANY 4
W1. Eradicate only the causes of
poverty but not the root source of
poverty
0.03 1.5 0.12 High debt load
W2. Poor financial management 0.08 5.0 0.2 No established
advertisement
W3. Limited style 0.09 4.5 0.075 Saturation of
shoe companies
W4. Poor global representation 0.04 3.5 0.297 Well known in
western
America
W5. Poor reputation across the globe
regarding the company use of “One for
One” model
0.025 A measure of
profit rather
than charity
Total Score 1.00
External Strategic Factors
Opportunities
Weight Rating Weighted
Score
Comments
O1. Donations from non-governmental
organizations
0.15 4.5 0.675 Enough funding
O2. More customers purchase to play
part in charity
0.05 3.57 0.175 Well supported
O3. Better marketing Channel 0.15 3.5 0.175 Not well positioned
O4 Advanced advertisement channels 0.15 2.1 0.315 Not well developed
Threats
T1. Poor financial positioning 0.2 5.5 1.1 High debt from
creditors
T2. Poor quality 0.05 2.3 0.115 Inventing now
T3. Competition 0.05 4.5 0.525 Well established
companies
T4. Oversaturation in the shoes market 0.15 3.5 0.675 Poorly positioned
globally
T4. Lack of good marketing channel 0.05 2.5 0.125 Developing now
Total scores
1.00 3.88
TOM’S SHOES COMPANY 5
Strategic factors
EFAS and IFAS
factors
Weigh
t
Ratin
g
Weighte
d Score
S
H
O
R
T
Duration
I
N
T
E
R
M
E
D
I
A
T
E
L
O
N
G
Comments
S2. Global brand(S) 0.1 2.0 0.02 X Goof quality
S3. One for One
marketing channel
(S3)
0.2 2.0 0.04 X Unique
marketing
channel
T1. Poor financial
management (T)
0.1 5.5 0.55 X Huge debt
T3.Competition (T) 0.2 4.5 0.9 X Many
companies
exist
O1.More purchase
by consumers for
charity (O+S)
0.2 5.5 1.1 X More sales
and charity
O2. Receive
donations from
other organizations
(O)
0.2 3.57 0.714 X Charity
recognition
Total Score 1.00 3.324
Table 2: IFAS AND EFAS Table
SWOT ANLYSIS
Tom’s shoes company has various strengths that can be utilized by the management to
obtain a global reputation and more sales from the shoes. The organization receives donations
from various organizations in support of its community outreach model to help the needy
children. the basic concept of the ideology of buy one for one acts a driving force to all
employees in the organization to focus on consumers satisfaction and enhanced varieties to
attract new customers and maintain their customer with a various choices.Large number of
person across the globe purchase shoes from the company to support the need. Buy one for one
TOM’S SHOES COMPANY 6
strategy is useful in attracting more customers and differentiating its marketing strategy from the
competitors.The model is a non-profit and profit based introduced by Mycoskie.However,
despite the organization being in a good position to market and make more sales, various threats
face the company. A negative global perception linked to the Buy one for one strategy being
linked with more profit gain than helping the poor is threatening the company as more customers
prefer helping the needy in their own way than purchasing shoes from Tom’s Shoes at double
price. Competition is also a threat to the company; various companies exist leading to
oversaturation of shoes producing companies in the market. The critical weakness factor
affecting the organization is the that the company targets a certain portion of demographics
between the aged 16-35 to attain more sales, rather than producing shoes for all people at
different ages (Bachnik, and Szumniak-Samolej 2013, p. 642). Poor financial positioning is also
a weakening factor for the organization and has greatly affected the organization to even not
being able to repay the creditors leading to change of ownership. The organization does not solve
the root source of the poverty and this majorly affects the lives of the children as they only rely
on donations for survival. In addition, the company has an opportunity to develop the marketing
channels; utilization of better advertisement channels, such as social media will help the
company brand image to gain popularity.
TOWS ANALYSIS
Threats and
Opportunities
Strengths and
Weaknesses
Threats
1. Competition from
other companies
2. Poor financial
positioning
3. Poor advertisement
channels
Opportunities
1. People volunteering
to help the
organization
2. Support from the
government and
other nations
3. Support from non-
governmental
organizations
Strengths
1. Low-Priced
production
2. Offer assistance to
the poor and
fortunate
3. Unique and strategic
business model
Strengths and
Opportunities (SO)
● The donation of
shoes to unfortunate
children helps the
organization to
attract more
customers who are
St Strengths and Threats
(ST)
● The adoption of
inexpensive mode
of production
facilitates the
organization to
overcome the
TOM’S SHOES COMPANY 7
4. Extension of
production line to
eye wear
willing to purchase
shoes to help the
poor.
● The organization
adapts a strategic
marketing model that
facilitate in attaining
a better position than
other players
● Development of
better methods for
advertisement will
help increase its
global positioning
threats from other
players and having
mass production of
shoes
● Strategic
management will
enhance the
alleviation of
corrupt officials in
the firm and avoid
debts to creditors.
Weaknesses
1. Target a certain
demographic (16-35
years)
2. Treats only the root
source of poverty to
the poor rather than
the source
3. Use cheap Chinese
factories for
production
Weaknesses and
Opportunities (WO)
● The organization
should maximize the
increased number of
consumers willing to
support the poor to
obtain the rootsource
of poverty
● Support from non-
governmental
organizations and the
volunteers will
enhance the
organization to
develop more
equipped and
technologically
advanced factories.
Weaknesses and Threats
(WT)
● Adopt strategic
management to
avoid corrupt
officials
● Extend the
production of shoes
for all demographics
not only the youths,
high school students
and college
students.
Table 3: TOWS analysis
TOM’S SHOES COMPANY 8
PORTER’S FIVE FORCES
STRONG MODERATE LOW
Intellectual property
Proprietary and various
patents are officious in
limiting the industry entry,
and make it difficult for a
company to establish a new
industry setting.
Competition
New entrants to utilize
TOMS shoes ideas such as
Sketchers bobs to enter in
the market. Merging of
various companies Ex Adida
acquisition of Reebok may
aid in challenging Nike.
Threat of
Substitutes
The substitution
power is moderate
due to stern rules
on new entrants.
Buyer power
The organizations set prices only to
the athletic, dancing shoes, and
orthopedic, therefore lessening the
bargaining power of consumers
(Lindström, 2018, p. 48).
Price sensitivity-
Most consumers concentrate more
on the cost of the shoes rather than
the quality.
Supplier power
The organizations can switch the
suppliers flexibly without any
decline in quality
Threat of Integration
Due to strict regulations that bar new
entrants decreasing the risk.
Table 4: Porter’s Five Forces
STEEPLE-PEST ANALYSIS
POLITICAL
● Stable political climate in major
markets
● Expanding free trade policies
● Improved government support for
infrastructure
ECONOMICAL
● Economic stability for developed
markets
● Rapid growth for developed
markets
SOCIOCULTURAL
● Increased personal wealth in
developed nations
● Increased importance on merchandise
safety
● Positive attitudes on leisure time
TECHNOLOGICAL FACTORS
● Heightened R&D investments
among organizations
● Rapid technological obsolescence
● Increased use of mobile
technologies
TOM’S SHOES COMPANY 9
ENVIRONMENTAL/ECOLOGICAL FACTORS
● Extension in ecological regulations
● Climate variation
● Improved sustainability approaches
among organizations.
LEGAL FACTORS
● Improved employment
regulations in urbanized
countries
● Expansion of customer laws
● Health and safety regulations
ETHICAL FACTORS
Embrace code of conduct to its
employees
Functions on the motto of “buy one
and gift one away” mode
Table 5: STEEPLE Analysis
Political factors- are describes as the extent to which the administration system
political administration affects the business or economy of a given nation. Some of the
various governmental factors may include heavy imposition of taxes, trade tariffs and
fiscal policy. Political factors affect the performance of a business in favor or in a
negative way.Good political stability in the country where the organization is located
such as North America and Argentina favor the operation of the company. Free trade
policies also contribute towards the good progress of the company permitting a good
working environment for the company.
Economic factors -are the major determinants of a country’s performance that
directly influences the operations of a business or a company. Economic factors may
have long term and resonating impacts to an organization. For example, how the trend of
inflation in a given country may influence the price of goods and commodities from the
company. Rise in inflation rates may lead to higher prices in the products, in return
affecting the purchasing power of the consumers and finally changing the demand and
supply model in that particular country (Shimp 2011, p. 55). They include inflation rates,
economic development patterns, and exchange rates. For Tom’s shoes company, the
economic stability favors its operations.
Social factors examine the social environs of a market or a business and weigh
determinants like, demographics, cultural trends, and population. Increase in the demand
of fashionable design of shoes by the youths is among the social factors favoring the
operation of the organizations. Tom’s targets a narrow range of demographic, especially
between the ages of 16-35 years.
Technological factors-these elements refer to the trend in the modern world
relating to the innovations in various fields affecting the operations of an organization
favor the market or not. Technological factors also relates to the amount of research and
technological know-how regarding the given sector or field. For Tom’s Shoes to fit in
quality production line, technological advancement is vital to the company, to improve
efficiency and quality.
TOM’S SHOES COMPANY 10
Legal Factors- are various laws that may influence the business environment in a
given country in various ways. They are internal or external rules that a company must
abide to when conducting its operation. They include safety, labor rules among others.
Environmental factors- These are factors that may not be controlled by the
company and have impact to the business functions. They include climate, geographical
location, weather, and global changes.
Ethical factors- are practices that an organization defines as morally upright and
acceptable to the society.
CAPM
No matter how the TOM’S Shoes diversifies its investments in different factories,
various levels of threats still exist. The organization seeks a rate of profits that
compensates for those risks. TOM’S utilizes the model to calculate market risks or
systematic risks and unsystematic risks. However, the organization has failed to mitigate
the risks and failed to repay its loan from the creditors leading to the change of ownership
to its creditors.
Conclusion
Business analysis tools are essential in analyzing the enterprise performance.
SWOT, PESTEL, Porter’s Five Forces, TOWS are various analysis tool that enhance
organizations to minimize risks, and maximize profits by analyzing possible threats and
weaknesses in the enterprise. TOM’S shoes company is a private owned, profitable based
organization that utilizes the business environment tools to maximize profits. Despite
being a private-owned organization, the company receives donations from non-
governmental organizations. The company has a unique marketing strategy which
includes community engagement and helping the needy through its motto of “buy one for
one”. Appropriate analysis of a business environment can enhance the companies to
thrive over other players.
TOM’S SHOES COMPANY 11
References
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TOM’S SHOES COMPANY 12
Appendices
Appendix 1: TOM’S SHOES COMPANY
Table 1: Strategic Planning for Tom’s shoes, include the vision, mission, values, and strategies
for achievement of mission for the organization.
Table 2: EFAS AND IFAS, the external and internal strategic summary for Tom’s shoes
TABLE 3: SWOT analysis- analyzes the strengths, weaknesses, Opportunities, and Threats
facing the organization.
Table 4: TOWS analysis- tool for analyzing how Burger king may utilize possible opportunities
and strengths to overcome threats and minimize weaknesses.
Table 5: Porter’s Five Forces-: Porter’s Five Forces- categorize various factors affecting the
organizations into high, low, and medium forces. Supplier power, buyer’s power and threat of
substitution are discussed.
Table 6: STEEPLE-Pest – discuss major political, economic, social, technological, ecological,
and legal and ethical factors affecting Tom’s Shoes
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