“The strategy of the firm is the match between the organisations external capabilities and its internal relationships” (Kay, 1993). Strategic decisions made by a firm may be based on many aspects of the business world, such as long term direction of the firm, advantage over competitors and values and expectations of the firm’s stakeholders. However, it is also important to take into account the competitive environment when assessing how a firm decides on its choice of strategy. There are countless variables a firm will carefully consider using a number of analytical techniques including the SWOT Analysis and Strategic Triangle to decide upon a competitive strategy that best suits their immediate and long term goals. This essay will attempt to determine the factors most prevalent when when an organisation is implementing its competitive strategy. Bowhill (1993) states that the analysis of the competitive environment helps to identify threats and opportunities that are external to the organisation. The competitive environment is a huge landscape which is constantly changing, forcing firms to adapt their competitive strategy very frequently. Changes in the macro-environment affect the economy as a whole and not just a specific market, these changes can be political, economic, social, technological, environmental or legal. Social changes are often initiated by a change in consumer needs, however, a change in consumer needs could be related to a change in the economic environment. For example, consumers may change their purchasing habits due to an increase or decrease in their disposable income, which is likely to be directly related to changes in the economy. Firms concerned with this market would need be aware of these potential changes as it would likely alter the demand for certain products. Competitive forces also play a major role in the strategy decisions of firms, however, competition is often viewed too narrowly. Competition for profits go far beyond established industry rivals to include four other competitive forces as well: customers, suppliers, potential entrants and substitute products (Porter, 2008). It is unlikely that all five of these competitive forces will ever be static therefore it is of great importance for firms to be constantly analysing all aspects of the competitive forces in order to maintain high profits and an edge over direct industry competitors. Although understanding and being vigilant of the competitive forces at play in the business world is of major importance, organisations must place equal emphasis upon understanding their own strengths and weaknesses compared with their main competition. If an organisation is able to understand and tailor their strengths and weakness through the process of internal appraisal it is likely that they will obtain a competitive advantage over their rivals. With this in mind, it is crucial for a firm to be fully aware of its competitive environment so they are able to be sure that no rival firms are gaining a competitive advantage over themselves. In order to analyse the competitive environment more closely, Porter’s ‘Five Forces Model’ must be looked at in great detail. Firstly, the bargaining p