Introduction
In the competitive nature of the economy today, a business needs to have a plan on how to remain relevant and prosper. In this case, a business needs a strategy that is adequately informed of all aspects to the business and is aimed at nurturing success. It is not possible to just be in the possession of all this information, and hence businesses resort to strategic analysis of their enterprises so as to have a holistic view of all the relevant information (Lavinsky, 2013). This work is intended to highlight the most appropriate approach of conducting a strategic analysis for a business.
If all stages of the analysis were compressed, there would be four key stages involved in this endeavour.
Step 1
The initial step to conducting a strategic analysis is the identification of its purpose. Each and every analysis of this kind must have an objective it aims to fulfil. For instance, a business may be aiming to ascertain or conceive a competitive advantage in the market. Clear stipulation of the purpose of the analysis ensures that the rest of the paper adheres to it by staying in course. It acts like a thesis statement of an essay. The other intent that identifying the purpose of the analysis meets is that it helps the enterprise to focus on a specific issue at a time and hence enabling it to come up with the best solutions. For instance, a business is best likely to come up with the best possible competitive advantage if it focusses on it (Lavinsky, 2013).
Step 2
This is arguably one of the most significant step as it summons the garnering of information that is relevant to the purpose of the analysis. For instance, a business can assess opportunities available in the case of developing a competitive advantage. In most forms of strategic analyses, a business has to identify its strengths and weaknesses so as to utilize the strengths in running business related activities and try to work out how to improve on its weaknesses. In this process, some key methods are used (Lavinsky, 2013).
SWOT
The SWOT technique is by far the most utilized technique in business strategic analysis. The main reason as to why this is like so is because it is very basic yet efficient. It is an acronym of strengths, weaknesses, opportunities, and threats. This basically means that the business has to identify this four attributes about itself so as to fulfil the prerequisites of the approach. By so doing, a business has the opportunity to establish where it fails and where it succeeds, and this forms a basis for the starting point (Valentin, 2001).
Value Chain
A value chain is the sequence of processes that an enterprise does in order to deliver a product or service with value to the market. All the efforts that a business does directly to the product or service that it deals with are referred to the value chain. The objective of any business is to make this chain very economical while at the same time availing high quality services and products. This can be achieved through ways such as increasing production to benefit from economies of scale. A strategic analysis should assess the value chain of a business so as to identify ways to make it more effective (Stabell, 2008).
Resource-based view (RBV)
The RBV is mainly used to form a competitive advantage for a business centred on available resources. The resources have to be of a certain nature in order to be considered to possess the ability to bring a competitive advantage to a business. Some of the attributes that such resources should exhibit include value, rarity, in-imitability, and non-substitutable. Most businesses possess these resources if they looked hard enough, and this is what strategic analysis strives to accomplish (Valentin, 2001).
Internal and External Environments
Every business has got internal and external forces that influence its performance. Strategic analysis tries to identify these forces so as to acknowledge the status it is in and compare it to where it aspires to be. The scope of both these environments is broad, and encompasses all other considerations described above. For instance, the strengths and weaknesses of SWOT are internal while opportunities and threats are external.
Step 3
After assessing the information that may be relevant to the purpose of the strategic analysis, it is then appropriate to identify the opportunities and threats that are involved. For businesses with highly skilled manpower, it is necessary to build up a team that is aware of these opportunities and threats or one that can readily identify them. The identification of these threats and opportunities should be parallel to the purpose of the analysis.
The nub on the external environment in this case is as a result of the nature of its extensiveness. The external environment is made up of very numerous, and different aspects that the business is not likely aware of. For instance, changes in the regulations or competitor’s strategy may not be immediately understood by a business. Most of the internal aspects to a business are well understood by those who execute the strategic analysis, but the external factors need more expertise and time to realize (Lavinsky, 2013).
The individuals vested with the obligation to assess the external environment factors should be comprehensive, and try to restrict their search to the specific factors that are related to the intent of the analysis. It is ineffective and costly to focus on areas of little significance to the area in question.
Step 4
The final step constitutes of the reviewing of the findings. Once all the information has been gathered, it is time to compose them all and link them to the purpose of the analysis. It is also appropriate to use charts and graphs where appropriate because it makes the information easier to understand. The business’s strengths, weaknesses, opportunities, and threats should also be clearly marked out. All the information relevant to the purpose of the analysis should then be used to define how best to utilize the strengths, deal with the weaknesses, exploit any opportunities identified, and counter any of the threats that mat be present (Lavinsky, 2013).
Structure of a Strategic Analysis
- Introduction/Problem Identification
- Main decision to be made
- Main problem to be solved
- Strategic Issues
- Sub-problems
- Compound Problem
- Internal Analysis/Environmental Analysis
- SWOT
- Value Chain
- Resource Based View
- Three Circles
- Alternative Analysis
- Recommendation
- Implementation Plan
- Controls
- budgets
- reviews
- surveys
- critical decision points
- Contingency Plan
- Appendices
*Lavinsky, D. (2013, October 18). Strategic Plan Template: What To Include In Yours. Retrieved from Forbes:
*Stabell, C. B. (2008). Configuring Value for Competitive Advantage: On Chains, Shops, and Networks. Strategic Management Journal, 19(5), 415-435.
*Valentin, E. K. (2001). Swot Analysis from a Resource-Based View. Journal of Marketing Theory and Practice, 9(2), 54-65.