Porter's five forces model and PESTEL analysis are tools used to analyze the external business environment and industry competition. Porter's five forces include the threat of new entrants, power of suppliers and customers, and threat of substitutes. PESTEL covers political, economic, social, technological, environmental and legal factors. The document provides examples of how these tools can be applied, such as analyzing Under Armour's position in the athletic apparel industry using five forces, and conducting a PESTEL analysis of Samsung's global operations and external business environment.

1. Portes five forces/ PESTEL
analysis

3. • The five forces identified by Porter that influence corporate strategy are competition in the
industry, Potential of new entrants into the industry, Power of suppliers, Power of customers, and
threat of substitute products.
• Its ultimate purpose is to explain how profits may be sustained in the face of negotiation and
direct and indirect competition.

4. • What Are Porter's Five Forces Used for?
• Porter's Five Forces Model helps managers and analysts understand the
competitive landscape that a company faces and to understand how a company is
positioned within it.

5. • Porter's Five Forces offer businesses a way to analyze and
outmaneuver their competitors in the marketplace. One way to
analyze your competition – and understand your standing in your
industry – is using Porter’s Five Forces model. Originally developed by
Harvard Business School’s Michael E. Porter in 1979, the five forces
model looks at five specific factors that determine whether or not a
business can be profitable in relation to other businesses in the
industry.

6. • Using Porter’s Five Forces in combination with a SWOT analysis will
assist in understanding the company’s position in the marketplace. A
SWOT analysis is a microanalytical tool focusing on a single company’s
data and analysis. In contrast, Porter’s Five Forces is a macro
analytical tool focusing on the industry’s economy. As a result,
Porter’s five forces disadvantages is that it may lead to over-planning
and hamper timely decision-making.

7. • As an example, stockanalysis firm Trefis looked at how Under Armour fits into the athleticfootwear and apparel industry.
• Competitiverivalry:Under Armourfaces intense competition fromNike, Adidas,and newer players.Nike and Adidas,which have
considerablylarger resources at theirdisposal,are makinga playwithin the performance apparel market to gain market share in
this up-and-comingproduct category.Under Armourdoes not hold anyfabricor process patents,hence its product portfoliocould
be copied in the future.
• Bargainingpower ofsuppliers:A diverse supplier base limits supplier bargainingpower.Under Armour’s products are produced by
dozens ofmanufacturers based in multiple countries.This provides an advantage to Under Armour by diminishingsuppliers’
leverage.
• Bargainingpower ofcustomers:Under Armour’s customers include wholesale customers and end-user customers.Wholesale
customers,like Dick’s SportingGoods,hold a certain degree of bargainingleverage, as theycould substitute Under Armour’s
products with those of Under Armour’s competitors to gain higher margins.The bargainingpower ofend-user customers is lower
as Under Armour enjoys strongbrand recognition.
• Threat of new entrants:Large capital costs are required forbranding,advertising,and creatingproduct demand,which limits the
entry of newer players in the sports apparel market.However, existingcompanies in the sports apparel industrycould enter the
performance apparel market in the future.
• Threat of substitute products:The demand forperformance apparel,sports footwear and accessories is expected to continue to
grow. Therefore, this force does not threaten Under Armourin the foreseeable future

8. What Is PESTLE Analysisand What Is Its Purpose?
PESTLE analysisis a tool to analyze an organization'sbusiness
environment.It's primarily used to identify both threats and
opportunitiesdue to external influences.

9. What Are the Six Elements
of PESTLE Analysis?
The six elements of PESTLE
analysisare:
Political
Economic
Sociological
Technological
Legal
Environmental

10. P: Politicalfactors includeelements such as tax policies,changes in trade
restrictions and tariffs, and the stabilityof governments.
E: Economicfactors include elements such as interest rates, inflationrates,
gross domestic product, unemploymentrates, levelsof disposableincome,
and the general growth or decline of the economy.
S: Social factors includetrends in demographicssuch as populationsize, age,
and ethnic mix, as well as cultural trends such as attitudetoward obesity and
consumer activism.
T: Technologicalfactorsinclude, for example, changes in the rate of new
product development,increases in automation,and advancementsin service
industry delivery.
E: Environmentalfactorsinclude,for example, naturaldisastersand weather
patterns.
L: Legal factorsinclude laws involvingissues such as employment, health and
safety, discrimination,and antitrust.

11. PESTLE Analysisof Samsung
Samsung is a global conglomeratethat operatesin the “White
Goods” market or the market for consumer appliancesand
gadgets. The companythat is a South Korean family owned
business has global aspirationsand as the recent expansion into
newer markets has shown, Samsung is not content with operating
in some markets in the world but instead, wants to cover as many
countries as possible. Therefore, the focus of this article is on the
external environmental driversof Samsung’s strategy.

12. Political
In most of the markets where Samsung operates, the
politicalenvironmentis conduciveto its operationsand
though there are minor irritantsin some of the foreign
markets like India, overallSamsung can be said to be
operatingin markets where the politicalfactorsare benign.
However, in recent months, it has faced significant political
headwindsin its home country of South Korea because of
the country’stensions with North Korea wherein the
company has had to take intoaccount not only the political
instability butalso the threat of war breaking out in the
Korean Peninsula. Apart from this, Samsung faces political
pressures in many African and Latin American countries
where the political environmentis unstableand prone to
frequent changes in the governing structures. Of course,
this is not yet a major cause for worry as the company has
more or less factored the politicalinstabilityintoits
strategic calculations.

13. Economic
This dimensionis especiallycritical for Samsung, as the opening up of many
markets in the developingworld has meant that the company can expand
its global footprint. However, this dimension is also a worry since the
ongoing global economic crisis has severely dented the purchasing power of
consumers in many developedmarkets forcing Samsung to seek profitable
ventures in the emerging markets. The key point to note here is that the
macroeconomic environmentin which Samsung operatesgloballyis beset
with uncertaintyand volatilityleadingto the company havinghad to
reorient its strategies accordingly. The saving grace for the company is that
it has adjustedrather well to the tapering off of the consumer disposable
incomes in the developedworld by expanding into the emerging and the
developingmarkets. Indeed, this is the reason Samsung has begun an
aggressive push intothe emerging markets in the hope of making up for lost
business from the developedworld.

14. Socio-Cultural
Samsung is primarily a South Korean Chaebol or a family owned
multinational.Thismeans that despite its global footprint it still
operatesfrom the core as a Korean company. Therefore, there
are several aspects to its global operationssome of which include
adaptingitself to the local conditions.In other words, Samsung
being a Globalcompany has had to act locallymeaning that it has
had to adopt a Glocal strategy in many emerging markets. Apart
from this, Samsung has had to tailorits products to the fast
changing consumer preferences in the variousmarkets where it
operates. The key point to note here is that Samsung operatesin
a market niche that is strongly influenced by the lifestyle
preferences of consumers and given the fact that socio cultural
factors are different in each country; it has had to reorient itself
in each market accordingly.

15. Technological
Samsung can be considered as being among the world’s
leading innovativecompanies.This means that the
company is at an advantageas far as harnessing the power
of technology and driving innovationfor sustainable
business advantageis concerned. This has translatedinto an
obsessive mission by the companyto be ahead of the
technologicaland innovationcurve and a vision to
dominateits rivalsand competitorsas far being the first to
reach the market with its latest productsis concerned.
however, as we shall discuss later, this has also resulted in
the company cutting corners with its imitationof the
legendary Apple’sproduct design and this has brought legal
and regulatory scrutiny and troubles for the company. There
is a lesson here for other technology driven companies from
Samsung’s experiences and it is that no matter how fast you
are to reach the consumer in this age of Big Bang
Disruption, doing the basics right is still the key to success.

16. Legal
As mentionedin the last section, Samsung has had to
face heavy penalties for its alleged imitationof the
Apple’siPad and iPhone and this has led to the
company taking a beating as far as public perceptions
and consumer approval ofits strategies are
concerned. It remains to be seen as to how the
company wouldwriggle out of the legal maze that it
finds itself in the developedmarkets because of the
variouslawsuits.

17. Environmental
With the rise of the ethical consumer who
wants his or her brandsto source and make
the products in a socially and environmentally
responsible manner, Samsung has to be aware
of the need to make its products to satiatethe
ethical chic consumer. This means that it has
to ensure that it does not compromise on the
working conditionsor the wages it paysto its
laborwho are engaged in making the final
product.

18. Conclusion
The preceding analysisclearly indicatesthat
Samsung has its task cut out for itself as it
navigatesthe treacherousglobal consumer
market landmine. Indeed, as the company
prepares to expand its global footprint, the
stakes could not have been higher in a
recessionary era and an uber competitive
technologicalmarket landscape.

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