STRATEGIC MANAGEMENT

SWOT ANALYSIS: INTEGRATING

INTERNAL AND EXTERNAL
PERSPECTIVES

​An internal and external strategic analysis

· Identify resources is to look
refers to reviewing your organization’s
at tangible and intangible
current state from an internal and external
resources available to your
perspective. The output of completing an
internal and external analysis – also known
organization​
as a strategic analysis – is to have a clear · Organizational capabilities
picture of your organization’s current state. are used to refer to a firm’s
capacity for undertaking a
Output of an Internal and External particular productive activity​
Analysis · Human Resources
· What you’re best at, and (Employees)​
what you need to improve upon.​
· Your clearly defined DATA USE IN INTERNAL ANALYSIS
competitive advantages.​ ● Employee Surveys
· Areas of market opportunity ● Customer Surveys
or growth opportunity to pursue.​ ● Business Strategy of record +
· A clear understanding of your Current Performance
competitors and what they’re best ● List of resources
at.​ ● List of capabilities
· Strategic themes to use as
the framework for your plan.​ TOOLS TO CONDUCT INTERNAL
ANALYSIS
INTERNAL ANALYSIS ● SWOT ANALYSIS
· It examines your organization’s ● VRIO FRAMEWORK
core competencies today that
are influenced by internal factors​
· These factors that are not driven
by external market dynamics, but
rather by your organization​
· This analysis would look at the
organization’s strengths and
weaknesses in meeting the needs
of your customer and stakeholder​
· Internal factors to consider are:​ OUTPUT OF INTERNAL ANALYSIS
● Output #1: A clear list of internal
strengths and internal weaknesses
of an organization.​Output #2:
 Strategic issues to address (from an TOOLS TO CONDUCT EXTERNAL
internal perspective).​ ANALYSIS
● Output #3: A list of strengths to use ● SWOT ANALYSIS
as fodder for your competitive ● PESTEL ANALYSIS
advantages (you’ll need to use these ● COMPETITOR ANALYSIS (Direct,
paired with a competitive analysis to Indirect, Substitutes or new entrants)
identify competitive advantages).​
● Output #4: Themes to use in your
strategic framework and strategic
planning objectives.​​

EXTERNAL ANALYSIS
● An external analysis examines the
external factors and forces that
impact your organization’s operating
environment​. OUTPUT OF EXTERNAL ANALYSIS
● External factors are forces and ● Output #1: Clear market
dynamics beyond the walls of your opportunities to use as part of your
organization, but impact your growth strategy.​
position in the marketplace​. ● Output #2: Identify areas of
headwinds that will work against
EXTERNAL FACTORS TO CONSIDER your organization.​
● Market Trends - projected growth, ● Output #3: Your competitive
profitability, entry barriers, cost advantages.​
structure, distribution system, trends, ● Output #4: Competitive moves you
and key success factors in your could make against your
competitive market.​ competition.​
● Industry Data and Trends – current
happening in your industry, including
factors like vendors, suppliers, STANDARDIZATION VS. LOCALIZATION
competitors, and buyers’ power.​ OF PRODUCTS AND SERVICES
● Operating Environment Trends -
global forces, demographic changes, Standardization
political winds, ecological and - High-quality content and brand
natural issues, technological trends, consistency across all markets are
economic factors, and social/cultural guaranteed by standardization.
shifts.​ Localization
- Focuses on addressing each market
DATA USE IN EXTERNAL ANALYSIS separately.
● Industry and Market Reports​
● Market Profitability Projections​ FEATURE STANDARDIZ LOCALIZATION
● Cost Structure​ ATION
● Supplier and Distribution Data​
Focus Global Local
 consistency relevance
STRATEGY EVALUATION
Cost Lower Higher ● Are we moving forward towards
achieving our core business
Time Faster Slower metrics?
Complexity Simpler More ● How much progress have we made
complex towards our vision?
● Are our Strategic Focus Areas still
Effectivene Can be less Can be relevant?
ss effective in more ● Which of our Objectives have we
specific effective in
completed?
markets. specific
markets. ● Do we have sufficient Projects to
deliver incomplete objectives?
● Are our KPIs still effective for
measuring progress towards our
Hybrid Approach to Localization and
objectives?
Standardization
● Where did we fall short of our
- In some cases, some companies do
targets? Why did this happen?
the hybrid strategy of the
combination of the localization and
standardization. This allows the
STEPS FOR A SUCCESSFUL STRATEGY
company to take use the
EVALUATION PROCESS
standardization while improving or
1. Evaluation starts at the start
customizing their products or
2. Implement consistent processes and
services to meet the demands of
tools
their customers.
3. Empower teams to evaluate their
own strategies
4. Take corrective action
5. Iterate your plan
Example: Using hybrid approach to
6. Celebrate success
standardization and localization
- Mcdonald’s
- IKEA
THE IMPORTANCE OF CONTINUOUS
- COCA-COLA
STRATEGY EVALUATION

Improved communication and

STRATEGY EVALUATION
collaboration
- Strategy evaluation is the process of
- Strategy evaluation can help to
analyzing a strategy to assess how
improve communication and
well it’s been implemented and
collaboration within the organization.
executed. It’s an internal analysis
By involving different stakeholders in
tool and should be used as part of a
the evaluation process,
broader strategic analysis for the
organizations can gain a better
organization when making strategic
understanding of the different
decisions.
 perspectives on the strategy and fundamental reason for existence, while the
develop a more comprehensive plan vision statement describes the desired
for improvement. future state.
Stay aligned with their goals and • SWOT Analysis: SWOT stands for
objectives Strengths, Weaknesses, Opportunities, and
- The business world is constantly Threats. This analysis helps organizations
changing. So it is important for identify internal strengths and weaknesses
organizations to regularly review and external opportunities and threats to
their strategies to make sure that develop strategies that leverage strengths
they are still aligned with their and mitigate weaknesses.
long-term goals and objectives. • PESTEL Analysis: This analysis
Identify and address potential problems examines the Political, Economic, Social,
early on Technological, Environmental, and Legal
- Continuous strategy evaluation can factors that can impact an organization's
help organizations to identify operations and strategies.
potential problems early on before
they cause serious damage. This Porter's Five Forces: Developed by
allows them to take corrective action Michael Porter, this framework analyzes the
quickly and minimize the negative competitive forces within an industry: threat
impact. of new entrants, bargaining power of
Take advantage of new opportunities suppliers, bargaining power of buyers,
- New opportunities are constantly threat of substitute products, and rivalry
emerging. So it is important for among existing competitors.
organizations to be flexible and
adaptable. Continuous strategy • Core Competencies: These are unique
evaluation can help them to identify capabilities and resources that provide a
and take advantage of new competitive advantage. Organizations focus
opportunities as they arise. on developing and leveraging these
Improve performance over time competencies to create value and
- By regularly evaluating their differentiate themselves from competitors.
strategies and making adjustments
as needed. Organizations can • Value Chain Analysis: This concept
continuously improve their breaks down an organization's activities into
performance and achieve their goals primary and support activities to identify
more effectively. areas where value is created and costs can
be optimized.

CONCEPTS OF STRATEGIC Business-Level and Corporate-Level

MANAGEMENT Strategies: Business-level strategies
pertain to how an organization competes
Mission and Vision Statements: These within a specific market segment, while
statements define the purpose and corporate-level strategies involve decisions
aspirations of the organization. The mission about the scope of the organization's
statement outlines the organization's activities and the industries it operates in.
• Diversification: This strategy involves • Change Management: As strategies
entering new markets or industries either evolve, managing the transition and
related or unrelated to the organization's changes within the organization becomes
current operations. crucial for successful implementation.
• Competitive Advantage: This refers to
the unique qualities that allow an
organization to outperform its competitors,
whether through cost leadership,
differentiation, or focus strategies.

Strategic Planning Process: This

structured process involves setting
objectives, analyzing the internal and
external environment, formulating
strategies, implementing those strategies,
and monitoring and adjusting them as
needed.

• Balanced Scorecard: This performance

measurement framework looks beyond
financial indicators to include customer
perspectives, internal processes, and
learning and growth metrics.

• Blue Ocean Strategy: This concept

suggests creating uncontested market
spaces (blue oceans) rather than competing
in overcrowded markets (red oceans), by
offering innovative and unique value
propositions.

Strategic Alignment: Ensuring that all

levels of the organization are working
towards the same goals and objectives, and
that various functional areas are
coordinated to support the overall strategy.

• Scenario Planning: This involves creating

different scenarios of potential future
environments to help organizations prepare
for a range of possibilities.

INTERNATIONAL BUSINESS AND TRADE

MARKET ENTRY STRATEGIES FOR 1. Exporting - involves marketing the
EMERGING ECONOMIES products you produce in the
countries in which you intend to sell
What are market entry strategies? them.
- Market entry strategies are methods 2. Piggybacking- If your company has
companies use to plan, distribute contacts who work for organizations
and deliver goods to international that currently sell products overseas,
markets. The cost and level of a you may want to consider
company’s control over distribution piggybacking.
can vary depending on the strategy 3. Countertrade- is a common form of
it chooses. indirect international marketing.
Countertrading functions as a barter
The three primary factors that affect a system in which companies trade
company’s choice of international each other’s goods instead of
market entry strategy are: offering their products for purchase.
4. Licensing- occurs when one
Marketing: Companies consider which company transfers the right to use or
countries contain their target market and sell a product to another company.
how they would market their product to this 5. Joint Venture - Some companies
segment. attempt to minimize the risk of
Sourcing: Companies choose whether to entering an international market by
produce the products, buy them or work creating joint ventures with other
with a manufacturer overseas. companies that plan to sell in the
Control: Companies decide whether to global marketplace.
enter the market independently or partner 6. Company ownership- if your
with other businesses when presenting their company plans a to sell a product
products to international markets. internationally without managing the
shipment and distribution of the
Why are market entry strategies goods you produce, you might
important? consider purchasing an existing
Market entry strategies are important company in the country in which you
because selling a product in an international want to do business.
market requires precise planning and 7. Franchising- A franchise is a chain
maintenance processes. These strategies retail company in which an individual
enable companies to stay organized before, or group buyer pays for the right to
during and after entering new markets. manage company branches on the
company’s behalf.
8. Outsourcing- Involves hiring
another company to manage certain
aspects of business operations for
your company.
10 Market entry strategies for 9. Greenfield investments- are
international markets” complex market entry strategies that
 some companies choose to use. Government debt is public
These investments involve buying debt or national debt owned
the land and resources to build a by the central government.
facility internationally and hiring a Reduced investor
staff to run it. confidence.
10. Turnkey- projects apply specifically Increased supply of currency.
to companies that plan, develop, and ● Political stability
construct new buildings for their A country’s political state and
clients. The term “turnkey” refers to economic performance can affect
the idea that the client can simply the strength of its currency.
turn a key in a lock and enter a fully ● Balance of trade/terms of trade
operational facility. Terms of trade relate to a ratio which
compares export prices to import
prices.
FACTORS INFLUENCING EXCHANGE If the price of a country’s export
RATES increases by a higher rate than its
imports.
● Inflation ● Government intervention
Inflation is the relative purchasing Governments have a collection of
power of a currency compared to tools at their disposal through which
other currencies. they can manipulate their local
Changes in inflation cause changes exchange rate.
in currency exchange rates.
● Interest Rate MANAGING FOREIGN EXCHANGE RISK
Interest rates, inflation and AND HEDGING STRATEGIES
exchange rate are all correlated.
Higher interest rates tend to lead to - It is important to consider your goal
a stronger currency. exposure, cost and flexibility. We
● Recession need to access the amount of cash
A country’s economy falls into a flow assets and liabilities.
recession, its interest rates will drop,
hindering its chances of acquiring HEDGING STRATEGY
foreign capital. - Hedging is a strategy that tries to
limit risks in financial assets. It uses
financial instruments or market
strategies to offset the risk of any
adverse price movements. Put
another way, investors hedge one
investment by making a trade in
another.

● Public debt/ government debt

HEDGING STRATEGIES
 ● CONDUCT RESEARCH ON THE
● Natural Hedging SELLERS
Investing assets whose performance To make sure that their suppliers
is negatively correlated through stick to the company’s requirements
some natural mechanism. for ethical business behavior,
● Contractual Hedging companies should perform due
Form of insurance that investment diligence on them.
used to hedge against the risk of
financial loss. ● PROVIDE TRAININGS TO
● Financial Hedging EMPLOYEES
The action of managing price risk to Employee training should be
offset the price movement of related provided which also includes the
physical transactions. company’s core values, mission,
● Operational Transaction vision, and objectives.
Risk exposure by means of non Through proper management,
financial instruments. employee training can be consistent
and a breeze.
IMPLEMENTING RESPONSIBLE
BUSINESS PRACTICES IN GLOBAL ● MONITORING KEY
OPERATIONS PERFORMANCE INDICATORS
Companies should track and report
What is responsible business practice? on their performance in terms of
- Are ones that consider how a ethical business conduct. This can
company's activities will affect all of be done through the Key
its stakeholders, including its Performance Indicators (KPIs).
workers, clients, suppliers, These indicators help monitor the
communities, and the environment. performance consistency of a
It can be difficult to implement business or organization.
ethical business practices in
multinational operations, but
performing so is essential for RESOLVING DISPUTES IN
businesses that seek to succeed CROSS-BORDER BUSINESS
over the long run. TRANSACTIONS

● CREATE A CODE OF CONDUCT TYPES OF DISPUTES IN CROSS -

A code of conduct is a written BORDER TRANSACTIONS
statement of the organization’s 1. BREACH OF CONTRACT
principles and commitment to ethical 2. PAYMENT DISPUTES
business practices. It should be 3. INTELLECTUAL PROPERTY
created with input from all relevant DISPUTES
parties and distributed to all 4. PRODUCT LIABILITY DISPUTES
employees and suppliers.
THESE ARE DIFFERENT LEGAL reach an agreement without the
SYSTEM involvement of a third party.
2. MEDIATION - This is a form of
1. CIVIL LAW - it is the most alternative dispute resolution (ADR)
widespread legal system in the in which a neutral third party, the
world. mediator, helps the parties to reach
2. COMMON LAW - It is based on the an agreement. Mediation is often
traditions and precedence. less adversarial than negotiation and
3. It is based on religious guidelines. can be more effective in reaching a
mutually satisfactory resolution.
HOW DO GOVERNMENTS INTERVENE IN 3. ARBITRATION - This is another
TRADE? form of ADR in which a neutral third
1. TARRIF - Import taxes are known as party, the arbitrator, makes a binding
tariffs. There are two different types decision on the dispute. Arbitration is
of tariffs: ad valorem tariffs, which often more formal than mediation
are determined as a proportion of and can be more expensive.
the value, and particular tariffs, 4. LITIGATION - This is the least
which are imposed as a common method of dispute
predetermined fee. resolution in cross-border
2. SUBSIDIES - A subsidy is a transactions. It involves the parties
government payment made to a filing a lawsuit in court to resolve the
producer. Subsidies can take the dispute. Litigation can be
form of tax rebates or low-interest time-consuming, expensive, and
loans, both of which are frequent. unpredictable.
Subsidies can also take the form of FACTORS TO CONSIDER WHEN
cash handouts or government-equity CHOOSING A DISPUTE RESOLUTION
participation, which are less METHOD
prevalent because they need the ● The nature of the dispute
use of government resources ● The amount of money in dispute
directly.
● The relationship between the parties
3. ADMINISTRATIVE POLICIES -
Governments can discourage ● The willingness of the parties to
imports by using these bureaucratic negotiate
regulations and procedures, which ● The expertise of the parties in ADR
make entry or operations more ● The availability of remedies in
challenging and time-consuming.
different jurisdictions
METHODS OF RESOLVING DISPUTES IN TIPS FOR AVOIDING DISPUTES IN
CROSS - BORDER TRANSACTIONS CROSS - BORDER TRANSACTIONS
1. NEGOTIATION - This is the most ● Carefully drafting contracts
common and least expensive ● Conducting due diligence
method of dispute resolution. It ● Communicating effectively
involves the parties directly trying to
● Understanding cultural differences
● Seeking legal advice