Strategic analysis

Strategic analysis

1. Strategic Analysis

   • Process of conducting research to find out the business environment and helps with forming future strategies

2. looks to answer 3 questions

   • Where is the business now?
   • how might the business be affected by what is happening or what may happen.
   • how could the business respond to these likely changes??

3. Effective Strategic analysis can lead to clearer goals more relevant goals and a less risky future for the business as it will be better prepared for the future

4. Aided by tools such as

   • SWOT
     • Strengths
     • Weaknesses
       • Normally internal.
     • Opportunities
     • Threats.
       • external.
     • Helps managers asses the most likely future successful strategies and constraints on them
     • Common starting point for developing new corporate strategies but it is rarely sufficient
     • not a quantitative form of assesment
   • PEST
     • Political (and legal)
     • Economic
     • Social
     • Technological
     • Pest analysis plays an important role in wheter your business strategy will be succesful as it takes into consideration all serious external influences
     • PEST analysis has to be constantly evaluated as things are always changing
     • For some multinationals PEST will have to be done in every country
     • Difference between vision statement and Mission statement
       • Mission Statement, what the company is about
         • This should answer:
           • What do we do.
           • For whom do we do it
           • What is the benefit
       • Vision Statement, what the organisation would like to achieve or to accomplish, what it wants to be in the future
   • BOSTON MATRIX
     • Cash cow
       • Low market growth, high market share
     • Dog
       • low market growth low market share
     • Star
       • High market growth high market share
     • Problem child
       • high market growth low market share
     • This method helps to evaluate all products in the business and how they are performing
     • This helps to focus on which products need the most attention.
       • Problem child may need support by more advertising or further distribution
       • Star products would continue to get eh same amount of support so that they can maintain their market position
       • The Cash cow could continue to be milked taking in the positive cashflow and investing in other products
       • Divesting when it comes to the dog...
   • Porters Five Forces Analysis
     • Barriers to entry
     • The power of buyers
       • buyer power is increased when there are many firms supplying the same good
       • Cost of switching suppliers is low
       • buyers can buy from other suppliers
       • There is no monopoly power
     • Competitive rivalry
     • The Threat of substitutes
       • New tech
       • price competition forces customers to consider alternatives.
       • any good that leads to consumers spending more money on that than other goods
     • the power of suppliers
       • Suppliers powers are high if the cost of switching suppliers is high.
       • when the brand being sold is very powerful and well known
       • customers have little bargaining power e.g there is only one supplier of the good

5. NO TECHNIQUE CAN GUARANTEE BUSINESS SUCCESS this depends on teh accuracy of analysis and how managers use the information from analysis

6. CORE COMPETENCIES

   • An important business capability that gives a firm a competitive advantage.