Strategic Analysis

10 Key excerpts on "Strategic Analysis"

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  eBook - ePub

  Managing Strategy

  Your guide to getting it right

  • Chartered Management Institute(Author)
  • 2014(Publication Date)
  • Profile Books

    (Publisher)

  While his work is academically rigorous, his ability to abstract his thinking into digestible chunks for the business world has given him wide appeal in both the academic and business worlds. It is now standard practice for organisations to think and talk about value chains, and the five forces have entered the curriculum of every management programme. Porter’s later thinking on strategy rides the new wave of revolutionary strategic thinking led by Hamel and links consistently with his earlier work. One suspects not only that there is more to come from Porter, but also that it will be wholly consistent with what he has said in the past.

    Performing a SWOT analysis

  SWOT analysis is a diagnostic tool for strategic planning which involves the identification and evaluation of strengths, weaknesses, opportunities and threats. This framework facilitates the assessment of internal capabilities and resources that are under the control of the organisation and of external factors that are not under organisational control. SWOT analysis involves the collection of information, rather than the framing of recommendations, which can only be considered once the facts have been confirmed. The analysis may be carried out by a single manager, but it usually involves the participation of a wider group, so that insights can be gained from across the organisation or department.

  SWOT analysis emerged in the 1960s from research at Stanford Research Institute into the failure of current corporate planning methods. The technique evolved, became widely used during the 1980s and remains popular, although critics have pointed out weaknesses in its application, including a lack of analytical depth. It provides a simple framework for analysing the market position of an organisation and can be applied in a range of planning and strategic contexts including strategy development, marketing planning, and the evaluation of strategic options for a whole business or an individual department. It may be used in conjunction with tools such as PEST (political, economic, social, technological) analysis, or one of its variants, or five forces analysis, which can provide a deeper understanding of the external environment and help to assess potential risks and threats to the profitability and survival of the organisation. SWOT analysis is also used by individuals to assess personal career prospects, but this checklist focuses on its use by organisations and departments and does not cover the individual aspect.

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  Tools for Project Management, Workshops and Consulting

  A Must-Have Compendium of Essential Tools and Techniques

  • Nicolai Andler(Author)
  • 2016(Publication Date)
  • Publicis

    (Publisher)

  5.1 Strategic Analysis 293 • The tool is based on the premises of competition. It assumes that companies try to achieve a competitive advantage over other companies or suppliers or customers. Therefore, strategies like strategic alliances, electronic linking of information systems of all companies along a value chain, virtual company- networks, etc. are often excluded. Overview of the five driving (macro-economic) forces Figure 91 states a number of factors that are part of the five forces. Note that the factors listed in the figure may as well drive or hinder the corresponding force – they work in very different directions. Cross-reference to related tools in this book Environmental analysis (PEST) (chapter 5.1.10), SWOT and TOWS (chapter 5.1.4), Critical success factor (chapter 5.1.2) Source: Recklies, Elkin, Wheeler, Glass 5.1.7 Competitor analysis Intention (Why and when do I use it?) After a series of Strategic Analysis tools in the preceding chapters that focus more on the internal perspective, this competitor analysis tool concentrates on exter- nal aspects and compares competitors.

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  Strategic Market Management

  • David A. Aaker, Christine Moorman(Authors)
  • 2017(Publication Date)
  • Wiley

    (Publisher)

  A SWOT analysis is a framework that guides such decisions. SWOT analysis examines a set of environmental trends classi fi ed company strengths (S) and weaknesses (W) and external opportunities (O) and threats (T). Firm Strengths and Weaknesses In developing or implementing a strategy, it is important to perform an internal analysis of the fi rm. This analysis follows the same checklist of strengths and weaknesses used to examine competitors in Chapter 3 (see Figure 3.4) and will not be reviewed in depth again here. There are more than three dozen organized under the categories of innovation, manufacturing, fi nancial, management, marketing, brand equity, and customer base. This checklist is a good place to start when analyzing whether the company can respond to a threat or opportunity or whether it needs to build new assets and competencies to do so. In addition, the Appendix A contains other fi nancial and non fi nancial criteria important to an internal analysis of the fi rm that should be used in this assessment. 94 Part One Strategic Analysis Each asset or competence relevant to the business should be evaluated as to its strength and impact. Is it dominant in that it provides a point of advantage that has endured and is likely to remain so in the future? The service delivery capability of Disney theme parks, for example, is so superior that other fi rms study its operation. Is the organization willing to invest to make the asset or competence dominant into the future? Certainly, Disney has shown this willingness over many decades. The investment commitment needs to be factored into the fi nancial resource picture. It may mean that resources for new ventures will be limited.

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  Strategic Planning

  A Practical Guide for Competitive Success

  • Stanley Charles Abraham(Author)
  • 2012(Publication Date)
  • Emerald Group Publishing Limited

    (Publisher)

  The economic characteristics of the industry in which the company competes. How the industry is changing. Who the company is really competing with, how tough the competition is, and how the company compares with its chief competitors. 82 Strategic Planning: A Practical Guide for Competitive Success Who the company’s target market is, how much the company knows about its customers, and how its customers are changing. What else is changing that could affect the company either negatively (a threat) or positively (an opportunity), in the economic, regulatory/legislative, demographic, sociocultural, or technological environments. The chapter also presented several analytical methods useful in doing an external analysis: Porter’s Five-Forces Model, industry attractiveness, the strategic-group map, and CSF analysis. While using these techniques is subjective for the most part and, therefore, possibly not rigorous or accurate enough for some, the ultimate purpose of doing such analyses should not be lost — to understand the external environment of the company and in what critical ways it is changing, and how those changes could affect it. Analyzing the External Environment 83 Chapter 4 Assessing the Company Itself Analyzing and assessing the internal environment of the company has several purposes. The most important pieces of information that must be identified are the company’s: Recent-past financial performance and current financial condition. Strengths and weaknesses, including the company’s management and leadership capabilities. Opportunities and threats. Capabilities — and determining which, if any of them, are core competencies that would give the company a competitive advantage. Competitive strength. Current strategy — and determining whether it is working or needs to be changed. Values, and the role they play in the evolution of its culture.

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  Strategic Management, Essentials Edition

  • Robert M. Grant, Peter Murray, Stuart Orr, Bella Butler, Pieter-Jan Bezemer(Authors)
  • 2020(Publication Date)
  • Wiley

    (Publisher)

  PART II THE TOOLS OF Strategic Analysis 2 External and industry analysis 30 3 Internal analysis of capabilities and core competencies 57 CHAPTER 2 External and industry analysis LEARNING OBJECTIVES After studying this chapter, you should be able to: 2.1 explain why an understanding of the competitive environment is critical to Strategic Analysis 2.2 conduct a political, economic, social, technological, environmental and legal (PESTEL) analysis 2.3 explain the use of Porter’s diamond for assessing determinants of national competitive advantage 2.4 conduct a fve forces analysis 2.5 describe an industry’s structure 2.6 conduct a network environment analysis 2.7 develop scenarios and explain their uses 2.8 identify key success factors and strategic groups. Pdf_Folio:30 SCENE SETTER China Inc — open for business Why is everyone setting up business in China? Ten years ago, businesses set up operations in China to manufacture cheaply. Now, businesses set up in China to access the market. 1 But is that the only motivation? The business environment in China offers a number of different features which make it extremely attractive — particularly to manufac- turers. While Chinese wage rates (particularly for skilled workers) have increased signifcantly over the last 10 years, the technological capacity of the country has also developed dramatically. This capacity has made the Chinese business environ- ment attractive to a larger number of businesses. For example, China recently developed the capability to refne a commonly occurring crystalline material which produces large quantities of methane and represents a viable and large-scale fossil fuel resource. 2 This development may signifcantly reduce the cost of energy in China. China’s business environment is in a state of rapid development.

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  Business Analysis

  • Debra Paul, James Cadle, Malcolm Eva, Craig Rollason, Jonathan Hunsley(Authors)
  • 2020(Publication Date)
  • BCS, The Chartered Institute for IT

    (Publisher)

  A key point that emerges from these examples is that strengths and weaknesses are found from within the organisation. They are discovered following an analysis of the VMOST, performance, the resource audit and the portfolio of products. In contrast, opportunities and threats are from outside the organisation and are found using the PESTLE or the Five Forces Model. The external factors that present opportunities and threats cannot be influenced by the organisation. It is the decisions about whether or not to grasp opportunities or deal with threats that are within the control of the organisation. The ability of the organisation to make decisions on how to respond to factors presenting opportunities and threats depends upon the internal strengths and weaknesses. Typical decisions may be:

  • to develop new products and services for the existing market;
  • to move into new markets;
  • to introduce a new marketing or sales strategy and increase the share of existing markets;
  • to diversify into new product areas that open up new markets.

  Enabling decisions on the way forward for the organisation is the essence of strategy analysis. STRATEGY EXECUTION

  There are various aspects to consider when executing an organisational strategy. These include the results of the internal and external environment analysis and the gap between the organisation’s current and desired target state. There are several techniques that may be used to inform strategy development and execution, in particular:

  • business model canvas (BMC);
  • business capability model (BCM);
  • value stream modelling;
  • target operating model (TOM).

  These techniques are discussed below. Business model canvas

  The term ‘business model’ has several meanings. It is used to refer to the way an organisation is designed to deliver products and services to customers. This provides a means through which to develop and execute strategy.

  Business models help to align the work of the organisation with desired outcomes. They can be used to assess the current and target state and to identify and plan changes.

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  Public Sector Management

  Mission Impossible?

  • Ian Chaston(Author)
  • 2017(Publication Date)
  • Red Globe Press

    (Publisher)

  7 Strategic Planning Tools The aims of this chapter are to cover the issues of: (1) The various analytical tools available to the strategic planner (2) Examining the application of the Product Life Cycle (PLC) and Boston Consulting Group (BCG) models in evaluating public sector service portfolios (3) Analysing the nature of the external market confronting a public sector organization (4) Determining the internal capabilities of the public sector organization (5) The utilization of an external opportunity/internal capability planning matrix (6) Summarizing scenarios by the utilization of a SWOT analysis (7) Managing forecast uncertainty using scenario planning Strategic Analysis The majority of management texts adopt the conventional approach of treating strategic planning as a rational–analytical process involving the detailed examina-tion of available data using a number of different planning tools as the basis for reaching conclusions and determining appropriate actions. Use of these strategic decision tools typically involves a logical sequential approach of the type sum-marized in Figure 7.1. Within this process the application of appropriate tools permit the assessment of external scenarios and the internal capabilities of the organization. The results of these analyses provide the basis for decisions to be made about whether to expand current operations or to diversify into new areas of business (Ansoff 1965). 123 124 PUBLIC SECTOR MANAGEMENT Internal capability and Resources analysis Internal environment Macro-environment and Market system analysis External environment S trengths W eaknesses O pportunities T hreats Analysis External issues Internal issues Figure 7.1 The ‘Where Are We Now?’ Rational–analytical process model approach Most of the standard strategic planning tools have their supporters and detrac-tors. Mintzberg (1994a) posits that most models and tools are based upon a rational–analytical approach.

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  Business Economics

  • Rob Dransfield(Author)
  • 2013(Publication Date)
  • Taylor & Francis

    (Publisher)

  6 Business strategy in an economic context

  Chapter Outline

  6.1   Introduction

  6.2   What business strategy involves

  6.3   The ingredients of strategy

  6.4   The criteria for an effective strategy

  6.5   How an environmental analysis helps to determine the suitability of a strategy

  6.6   The nature of strategic vision, objectives, focus and architecture

  6.7   Business strategy in an economic context

  6.8   Summary

  Chapter Objectives

  By the end of this chapter you will understand:

  • Why businesses need to have an effective strategy
  • The components that need to be in place to create a business strategy
  • How to judge a strategy in terms of suitability, acceptability and feasibility
  • How to create a PEST analysis
  • Why it is important to evaluate the economic environment and its impact on business strategy

  6.1  Introduction

  Businesses need to have a sense of the direction in which they want to move. Once they are clear about this they can formulate their plans – strategies to achieve their desired goals. However, the process is not as simple as it sounds. Businesses operate in uncertain environments. They need therefore to be continually prepared to adjust their strategies to accommodate for environmental change.

  Perhaps the biggest uncertainty in the business environment is economic change. This is one of the reasons why an understanding of economics is so important to business students. You need to be able to understand the impact of major macro-economic changes such as changes in the gross domestic product (GDP) of a country, and the relative growth of different economies. This chapter therefore explores corporate strategy in the context of an uncertain economic environment. It illustrates the sorts of strategies that businesses have employed to survive and prosper against a background of economic uncertainty.

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  Strategic Management in the Third Sector

  • Roger Courtney(Author)
  • 2020(Publication Date)
  • Red Globe Press

    (Publisher)

  Alternatively they can use some of the more general well-tested tools and techniques (some of which have already been mentioned above) that are available as a result of previous thinking and practice in other sectors about strategic planning. This chapter explores some of the ways that the board and staff of Third Sector organizations might review themselves as part of their Strategic Analysis. Review tools that have proved useful in other sectors as well as a number of tools that have been specifically designed for the Third Sector and public sectors will be examined. Learning objectives After studying this chapter, you should be able to: explain the importance of carrying out an internal review; ■ describe some common tools for carrying out an internal review; ■ outline some of the limitations of the various tools of internal analysis. ■ Internal review tools and techniques It is crucial, for an organization in planning its future, to have a very clear and honest understanding of where it is now. The following are some of the models and tools that have been developed by strategic planning practitioners and writers over the last 30 years to help evaluate organizations and their environments, starting with some of the simpler tools. 8 Strategic thinking 110 Strengths and Weaknesses The SW ( S trengths and W eaknesses) of a SWOT analysis, although used frequently in a variety of contexts, is still a straightforward and invaluable way of bringing out views of what an organization is currently good and bad at, and which can be carried out without external facilitation or audit. This enables the organization to build on its unique strengths so that the strategy eventually adopted reflects what the organi-zation does particularly well. It also enables the organization to develop strategies to work on, or manage, the things that it currently does less well, or indeed to withdraw involvement in those areas and leave it to others who will do it better.

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  Comprehensive Strategic Management

  A Guide for Students, Insight for Managers

  • Eric J. Bolland(Author)
  • 2017(Publication Date)
  • Emerald Publishing Limited

    (Publisher)

  L. The SWOT in progress can be checked against the organization ’ s mission and vision statements. This will assure alignment with the overall purpose of the organization. M. A caution for any weighing scheme is to avoid having too many elements to weigh. Having too many factors leads to the diminishing of the most powerful factors in the SWOT and the advancement of less powerful factors. The SWOT analysis is a proven and highly understandable tool in strategic management. It has survived while other tools have been set aside. Virtually every business executive is familiar with SWOT and nonbusiness executives are as well. As a nonquantitative tool, it has limitations. It is roughly directional as a tool and produces results that are orders of mag-nitude rather than precise measures. Especially on the external side, both opportunities and threats may be short lived. Both opportunities and threats must be seen as Yeat ’ s cold eye be cold eyed and hard-nosed be realistic. The idea of risk plays a larger role in the external side because this side is harder to con-trol for the organization. The strategy manager must be particu-larly cognizant of risk and vigilant to act on it. Internal and External Analysis 115 Processing SWOT Information Conducting a SWOT is one thing but doing something about it is another. If it is a true tool of strategy, it needs to play a role in strategy formulation and execution. Customarily, after the SWOT is completed, organizational leaders will digest the fi nd-ings and plan strategy. The idea of playing from strengths and not repairing weaknesses is popular. The organization ’ s leaders need to apply SWOT results to three areas: the internal condition, the external condition, and the resultant of combining internal conditions with external con-ditions. For internal conditions, the organization needs to identify its major strengths and then determine which of those strengths can be translated into coherent strategic actions.

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