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What Is Strategic Analysis

Strategic analysis refers to the process of conducting research on a company and its operating environment to formulate an effective strategy. The strategic analysis process involves identifying relevant internal and external data, defining the environments to be analyzed, and using analytical tools. The process includes performing an environmental analysis of current strategies, determining strategy effectiveness, formulating alternative plans, and recommending and implementing the most viable strategy. Strategic plans operate at three levels - corporate, business, and functional - to help a company gain and sustain a competitive advantage.

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72 views6 pages

What Is Strategic Analysis

Strategic analysis refers to the process of conducting research on a company and its operating environment to formulate an effective strategy. The strategic analysis process involves identifying relevant internal and external data, defining the environments to be analyzed, and using analytical tools. The process includes performing an environmental analysis of current strategies, determining strategy effectiveness, formulating alternative plans, and recommending and implementing the most viable strategy. Strategic plans operate at three levels - corporate, business, and functional - to help a company gain and sustain a competitive advantage.

Uploaded by

Helen Moyo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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What is Strategic Analysis?

Strategic analysis refers to the process of conducting research on a


company and its operating environment to formulate a strategy. The
definition of strategic analysis may differ from an academic or business
perspective, but the process involves several common factors:

1. Identifying and evaluating data relevant to the company’s strategy


2. Defining the internal and external environments to be analyzed
3. Using several analytic methods such as Porter’s five forces
analysis, SWOT analysis, and value chainanalysis

 
 

What is Strategy?
A strategy is a plan of actions taken by managers to achieve the company’s
overall goal and other subsidiary goals. It determines the success of a
company. In strategy, a company is essentially asking itself, “Where do you
want to play and how are you going to win?” The following guide gives a
high-level overview of business strategy, its implementation, and the
processes to lead to business success.

Vision, Mission, and Values

To develop a business strategy, a company needs a very well-defined


understanding of what it is and what it represents. Strategists need to look
at the following:

 Vision – What it wants to achieve in the future (5-10 years)


 Mission Statement – What business a company is in and rallies people
 Values – The fundamental beliefs of an organization reflecting its
commitments and ethics

After gaining a deep understanding of the company’s vision, mission, and


values, strategists can help the business undergo a strategic analysis. The
purpose of a strategic analysis is to analyze an organization’s external and
internal environment, assess current strategies, and generate and evaluate
the most successful strategic alternatives.

Strategic Analysis Process

The following infographic demonstrates the strategic analysis process:

 
 

1. Perform an environmental analysis of current strategies

Starting from the beginning, a company needs to complete an


environmental analysis of its current strategies. Internal environment
considerations include issues such as operational inefficiencies, employee
morale, and constraints from financial issues. External environment
considerations include political trends, economic shifts, and changes in
consumer tastes.
 

2. Determine the effectiveness of existing strategies

A key purpose of a strategic analysis is to determine the effectiveness of


the current strategy amid the prevailing business environment. Strategists
must ask themselves questions such as: Is our strategy failing or
succeeding? Will we meet our stated goals? Does our strategy align with
our vision, mission, and values?

3. Formulate plans

If the answer to the questions posed in the assessment stage is “No” or


“Unsure,” we undergo a planning stage where the company proposes
strategic alternatives. Strategists may propose ways to keep costs low and
operations leaner. Potential strategic alternatives include changes in capital
structure, changes in supply chain management, or any other alternative to
a business process.

4. Recommend and implement the most viable strategy

Lastly, after assessing strategies and proposing alternatives, we reach the


recommendation. After assessing all possible strategic alternatives, we
choose to implement the most viable and quantitatively profitable strategy.
After producing a recommendation, we iteratively repeat the entire process.
Strategies must be implemented, assessed, and re-assessed. They must
change because business environments are not static.

Levels of Strategy

Strategic plans involve three levels in terms of scope:


 

1. Corporate-level (Portfolio)

At the highest level, corporate strategy involves high-level strategic


decisions that will help a company sustain a competitive advantage and
remain profitable in the foreseeable future. Corporate-level decisions are
all-encompassing of a company.

2. Business-level

At the median level of strategy are business-level decisions. The business-


level strategy focuses on market positions to help the company gain a
competitive advantage in its own industry or other industries.

3. Functional-level

At the lowest level are functional-level decisions. They focus on activities


within and between different functions aimed at improving the efficiency of
the overall business. The strategies are focused on particular functions and
groups.

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