Integrative and Analytic Tools

The tools selected were the best to perform analysis. PESTEL analyzes critical business
environmental factors that the company may need to consider in its expansion. Porter’s 5 forces
offer an analysis of the industry, the customers, competitors, and the suppliers.
Justification for selection of the tools
The PESTEL analysis provides the company with an analysis of the market and helps the
company with valuable research that it can use for planning (Yuksel, 2012). For example,
knowing China’s technological environment can allow the company to plan what kind of
technology it will acquire based on what is available in the Chinese market. The tools also offer
an assessment of the company’s capabilities.
The tools can be used together and complement each other since they each provide the
company with unique information (Tereso et al., 2019). For example, when the company plans
its use of technology in operations such as marketing, Porter 5 forces enable the company to
better understand the market in deciding how the technologies will be used to market to the
customers. In another example, Porter’s 5 forces provide information about the company’s
competitors in the new market and indicate the size of the market and how fast it grows annually.
John and Deborah’s company can compare the market size against the economic environment in
PESTEL and set revenue and profit targets for itself.
Refuting people who choose an additional tool
People may differ in opinions on the best tool to use. However, the best way to refute
them is by providing evidence through the means selected that they provide valuable information
for the company. For example, some may ask for a SWOT analysis which is also an excellent
tool. These tools can be used altogether. One of the key successes to project management is
having as much information as possible to work with. I would refute such people by asking them
to collect data using their tools for us to compare notes.

Analysis of the market based on the tools.

PESTEL analysis
John and Deborah’s company should consider the following factors.
Political
China is a communist country that has experienced peaceful politics for a while now. The
country has strong economic ties with the United States. Both countries are members of the
World Trade Organization. The company can therefore expect that settling into the Chinese
market will not be affected by politics.
Economic
China is one of the world’s largest and fastest-growing economies. The labor costs are
significantly low, and this contributes greatly to economic growth. The Chinese government is

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also very supportive of innovation, and the high population provides a large market for
producers. Its gross domestic product was 8.1% as of 2021, according to World Bank
projections.
Social
Social structures are highly revered in China. In this country, family is considered the basic
social structure. This is one of the reasons why China has such a large population. The literacy
levels are also high, and as such, the company can expect a good supply of labor and talent.
Technological
China is one of the most technologically advanced states. The country has advanced technology
in manufacturing and processing, engineering, energy, and power, which makes it one of the
world’s top exporters of technology. Therefore, the company can expect that operations will be
supported by technology such as in manufacturing, financial management, marketing, and human
resource management.
Environmental
The Chinese people are very conservative about their environment, and as such, the Chinese
government has put in place regulations for businesses to ensure sustainable business operations.
This is an important consideration for the company. The Forest Law of the People’s Republic of
China (PRC) is an important consideration since lumber is an important aspect of the company’s
business activity.
Legal
There are several legal factors that the business must consider when establishing a market inside
China. The legal system in China is very strict but elaborate. The company would have to
acclimatize itself with the labor standards, employee contracting and remuneration, disputes,
business ownership, and financial reporting standards.
PESTEL verdict
From the above PESTEL analysis, John and Deborah’s company has an opportunity to thrive in
one of the world’s best economies. PESTEL analysis shows that the Chinese market provides a
unique opportunity. It is growing at a constant rate and has primed economic support resources
through government regulation and support. Technology and political factors also support the
decision to choose China as the preferred destination for investment.

Porters 5 Forces

Bargaining power of suppliers
This refers to the powers that suppliers have to affect the market (Goyal, 2020). The company
requires supplies for its operations, and suppliers affect different aspects such as quality and
costs. Suppliers can reduce the quality of their products and affect the quality of the finished

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products that the company manufactures. They can also increase the price of their supplies,
reducing the company’s margins. Therefore, the company will need to find
Bargaining power of customers
Customers are the drivers of the industry. In the furniture industry, it becomes important for the
company to consider factors such as their purchasing power, changes in tastes and preferences,
and the perception of customers. A good example of tastes and preferences could be observed
from the customers that prefer to purchase from local companies to promote them, which could
put John and Deborah’s company at a disadvantage in China. The customers’ behavior and
Competition in the industry
The Chinese furniture market is highly competitive and dynamic and grows at an annual 7% rate,
according to Statista (Statista, 2022). The major players in that industry are Interior Furniture,
Qumei Furniture, IKEA China, Kinwai Group China, and Chengdu Sunhoo Industry Co., Ltd.
Companies compete on creativity, and the majority of the rivalry happens in the digital space
where most companies sell their products.
The threat of substitute products
The threats of substitute products in the finance sector can be analyzed by considering
alternative furniture products such as the ones manufactured from plastics. These products offer
very little competition, if any, and do not provide any significant threat to the company.
Threats of new entrants
The furniture market has significant threats from new entrants. This is due to the artistic
nature of the industry; trends keep changing, and only the top countries are able to attract and
maintain the best talents. The threat of new entrants is, therefore, significantly low, and with
effective strategies, the company can overcome this threat. The Chinese market is also very
large, and as such, competition may not be as stiff. New entrants can create their own niche in
the market by developing new styles and designs. Companies with a large market and better
control of the market can do a better job at adapting to new designs due to access to better
resources and enhanced marketing capabilities. New entrants, such as John and Deborah’s
company, need’s strategies to keep it ahead of the competition.
Verdict
From the above analysis, John and Deborah’s company is in a very competitive industry.
The Chinese market has positives being that it is large, providing the opportunity for John and
Deborah’s company to establish its own market share. Secondly, the Chinese market is growing
at a good rate annually. This rate provides a benchmark for the company to set its own targets for
revenue growth.
The disadvantages are that the market already has some established players who control
the majority of the customer base and benefit from most of the sales. Large companies also set
the prices, making it challenging for new companies to control their margins.

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References
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. https://www.researchgate.net/profile/Anchit-
Goyal/publication/348550277_A_Critical_Analysis_of_Porter’s_5_Forces_Model_of_Co
mpetitive_Advantage/links/6003480392851c13fe17e878/A-Critical-Analysis-of-Porters-
5-Forces-Model-of-Competitive-Advantage.pdf
Statista. (2022a). Furniture – China. Retrieved August 20, 2022, from
https://www.statista.com/outlook/cmo/furniture/china#global-comparison
Tereso, A., Ribeiro, P., Fernandes, G., Loureiro, I., & Ferreira, M. (2019). Project management
practices in private organizations. Project Management Journal, 50(1), 6-22.
Yuksel, I. (2012). Developing a multi-criteria decision making model for PESTEL
analysis. International Journal of Business and Management, 7(24), 52.