What is Strategic Analysis?

The term strategic analysis involves researching an organization and its daily activities to create a strategy. The strategic analysis process involves the following:

1. Finding out and ascertaining information that coincides with the organizational strategy.
2. Understanding the types of environment, both internal and external, for analysis purpose
3. Making use of various analytical techniques, including Porters five forces analysis, value chain analysis, and SWOT analysis.

Back To: BUSINESS STRATEGY

What goes into Strategic Analysis?

A strategy is nothing but a well-formulated plan devised by managerial levels for accomplishing the primary and secondary organizational objectives. To create a business strategy, the company must understand its nature of operations and its significance. Start by considering the following:

• Vision: What the company looks forward to achieving in the next 5 or 10 years?
• Mission Statement: What is the nature of the organization?
• Values: What are the pillars of the organization that represent its ethics and moral values?

The process for conducting a strategic analysis involves the following steps: 

Research existing strategies 

Assess the companys current strategies. Focus on internal environment considerations, such as financial problems, improper functioning of operations, reduced employee motivation, etc.. The look to external consideration, such as economic fluctuations, changes in preferences and interests of customers, prevailing trends in politics. 

Evaluate the Effectiveness of Current Strategies 

Is the current strategy meeting company objectives? Is it feasible to continue the strategy? Does the strategy coincide with the set vision, mission, and values? 

Devise a Strategic Plan 

This involves developing alternative strategies. For example, changing from a cost to a differentiation strategy. 

Choose and Implement the Strategy 

Once a proper evaluation of various strategic alternatives is made, its the time to execute the most feasible and beneficial strategy. Implementation of the strategy will vary across firms. Its important to execute, evaluate and re-evaluate strategies for better results. Strategic plans include three stages in the context of scope:

• Organization-level - At the topmost level, a corporate strategy is related to making top-level strategic decisions so that the business can have core competence and maintain its profitability in the coming years.
• Business-level - The middle strategy levels are the point where business-level decisions are taken. This type of strategy emphasizes market positions so as to enable the organization in having a sense of competitive advantage in not only the industry its operating in but also the other industries.
• Functional-level - Function-level decisions are made at the lowest level of management. They emphasize operations taking place within and amidst several functions in order to make the organization efficient. Such strategies concentrate on specific functions and categories.