Strategic management incorporates the diverse approaches by which a business organization may be able to conduct profitable and productive business operations within its respective business environment. In order for the business organization to function and operate in an essential manner, the key requirement is the development of strategies that are focused on the achievement of the ultimate goals and objectives of the organization as a whole.
There are various considerations that are required to be made in the process of effective decision-making and strategy formulation. Identifiably, the evaluation of the internal and external business environment in which the business organization operates may be regarded as being the prime factor contributing to the decision-making processes of business organizations.
The multiple aspects contributing to the development of effective strategies for business organizations, can be further recognized to include the availability and utilization of intangible as well as tangible resources, organizational structure, market trends, corporate culture, as well as the presence of various opportunities and threats in the industry. The following case study will aim toward the identification of the internal and external business environment through a SWOT and PESTEL analysis for the British oil company, Castrol.
In doing so the strengths, weaknesses, opportunities, and threats of the organization will be discussed in detail, along with relevant methods by which the company may be able to achieve its strategic goals and objectives.
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Overview of the Company
Castrol can be identified as a well-recognized British oil company that engages in the manufacture and sale of automotive lubricants and other industrial equipment. The various products that are offered by the company include various types of oils, greases, and other similar products that may be used for lubrication applications. The brand name of Castrol was originally given to mean the motor oils that are produced by the company. The company was founded in the year 1899 as Wakefield and Company and later as Castrol Limited in the year 1960. The headquarters of the company is situated in Berkshire in the United Kingdom. It is also significant to note that over the years the company has developed a strong brand reputation and recognition through the provision of high-quality products to its customers at really affordable prices. Such provision of the products offered in turn has enabled the targeted customers to perceive a high level of value from the consumption of Castrol products.
Furthermore, the success of the company over the years is also owing to the skills and talents of the workforce, who specialize in their respective fields and ensure the business operations and functions are conducted in a smooth and highly efficient manner. In addition to this, it may also be mentioned that the technological infrastructure present with the company for the purpose of conducting its various production and distribution processes is very strong, which indicates particular strengths in the internal business environment. However, some of the major threats that are faced by the company include the rising prices of oil which have reduced the usage of private vehicles among customers to a significant level. Furthermore, other regulations pertaining to the protection and preservation of the environment are also required to be adhered to by the organization in an effective manner.
A situational analysis involves the evaluation of the business environment of an organization including the internal and external factors that may influence its operations and processes. Situational analysis additionally includes market research and thereby the various factors that ultimately provide threats or opportunities to its operations. In the case of Castrol, the conduction of a situational analysis would help in the identification of the various factors which would directly affect the effectiveness with which the business operations and functions are conducted. Furthermore, it can also be observed that the various aspects considered for the conduction of a situational analysis include suppliers, customers, competitors, government, and the legal adherences that are to be followed by the business organization. The effect of these elements on the organization facilitates the recognition of the several opportunities and challenges that may be faced. In the following section of the case study the situational analysis for Castrol will be conducted using the strategic frameworks of SWOT analysis and PESTEL analysis so that effective strategies can be developed on the basis of the findings from the internal and external business environment.
The framework of SWOT analysis assists in the assessment of the internal and external business environments in which a business association operates. The reason why a SWOT analysis must be conducted is to propel the identification of the numerous interior strengths and weaknesses as well as the exterior opportunities and threats that may be faced by it during the course of its business operations. The significance of the strategic framework of the SWOT analysis is to help the business organization ineffective strategy construction so that it may be able to utilize the strengths and opportunities available to the organization, and thereby tackle the weaknesses and threats that may cause discrepancies in its business operations and functions. Such a SWOT analysis may be conducted for the business organization under discussion, that is, Atlantic.net which will help in the identification of its strengths, weaknesses, opportunities, and threats in the following manner:
Strong brand recognition in the United Kingdom and the other countries where the products of the company are available
High brand loyalty of the customers who have previously used the products offered by the company due to its high quality
Changing preferences of the customers regarding increased awareness towards the environment as well as the sustainability of business activities
Moderate presence on social media platforms, indicating scope for improved communication of the company with its customers
Development of new products that are more sustainably produced in order to meet the changing tastes and preferences of the targeted customers
Increased presence on social media channels in order to reach out to the customers in a more efficient manner
Ever-increasing competition in the automobile industry in terms of more sustainable business practices and the use of enhanced technology
Ever-changing tastes and preferences of the customers which require the company to engage in product development
The strategic framework of PESTEL analysis involves the consideration of the various factors that may influence the business activities, functions, and operations of a business organization as may pertain to the external business environment. In this regard, it may be identified that the strategic framework of PESTEL analysis helps in the assessment of the external environment in which a business organization operates. In the case of Castrol, the purpose of conducting a PESTEL analysis is to recognize the several ways by which the organization may be faced with opportunities and threats from the external business environment of the automobile industry in which it operates. Such an identification of the threats and opportunities in turn will help in the formulation of effective strategies that will enable the organization to achieve its strategic goals and targets and thereby remain competitive in the retail industry among other major rivals across the world. The PESTEL analysis for Atlantic.net can be conducted in the following manner:
Stability in the political environment of the UK, as well as the other countries in which the products offered, are available, will directly affect the business operations of the company
Effectiveness of the regulations developed by the government of the UK and the other countries of business operations, regarding the development of best practices for corporate governance
Rate of GDP as compared to the previous years in the various countries where the company operates, as an indication of possible economic development and thereby financial opportunities in the market
Effective regulations developed by the countries where the company operates pertaining to various factors such as employment, wages, and trade policies
Preference of the customers toward high-quality products at low prices
Changing preferences of the customers in terms of the use of advanced technology as well as environment-friendly products
Availability and scope for development of technological infrastructure in the countries where the company operates
Preference among the customers toward innovative products in terms of the use and application of advanced technology
Effective regulations in the countries where the products of the company are available regarding the protection and preservation of the environment
Awareness among the customers targeted by the company regarding the importance of sustainable business activities
Effective administrative policies to enforce the regulations adopted by the countries where the company operates
Effective regulations regarding ensuring the health and safety of individuals, quality standards and labor laws as well as other legalities regarding technological infrastructure
From the discussion, it may be concluded that Castrol is required to pay attention to the development of sustainable business activities and the development of technological infrastructure in order to remain productive and profitable in the market. Furthermore, the company may also engage in the development of effective marketing strategies to enhance the rate of customer loyalty and trust.