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 chain analysis

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 often 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 that 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 how it 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 4. Recommend and implement the most viable strategy
The following infographic demonstrates the strategic analysis process: Lastly, after assessing strategies and proposing alternatives, we reach a 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 position 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.
These strategies are focused on particular functions and groups.
1. Perform an environmental analysis of current strategies
Ref.
Starting from the beginning, a company needs to complete an environmental analysis of its current strategies. Internal
Strategic Analysis - Overview, Examples, Levels of Strategy (corporatefinanceinstitute.com
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.
Types of strategic analyses Competition evaluation: To measure the intensity of industry
Companies might conduct the following two types of analyses when trying to optimize their processes: rivalry, a company might evaluate a competitor's brand loyalty, the
size of the rival company, the costs of switching brands for
Internal strategic analysis consumers, and market share. Outlining how your competitors
An internal analysis examines a company's processes, including assets, liabilities, control occupy the market can help you identify how you might implement
environment, process monitoring, and risk assessment. a strategy that can address the threat of substitutes.

An internal analysis aims to determine how effectively a company's processes meet its Bargaining power of suppliers: The bargaining power of suppliers
objectives and comply with regulations or standards. refers to the ability of a supplier to influence a company's ability to
Companies can use the results of an internal audit to make resource investments that revise its strategy. For example, an analysis can reveal how flexible
target their weaknesses. An internal analysis can also help evaluate the market by suppliers are with the price of their materials and the availability of
selecting a target demographic, describing successful processes, and understanding the products, which can influence production costs and quality.
costs of products compared to other companies. Here are some considerations for an
internal analysis: Technology: A technological evaluation can help a company
identify technological inefficiencies and potentially outdated
software or data collection operations. For example, if rival
Strengths: An internal analysis involves investigating the company's strengths. The main objective of a strength
companies use cloud computing technology to support products and
evaluation is to determine how effectively a company's resources and competencies contribute to the overall
services, this might contribute to larger discrepancies in performance
sustainability and profitability of its processes.
if a company uses outdated technology.
Weaknesses: Evaluating weaknesses is also essential to conducting an internal analysis. For example, an analysis
Sociological goals: Sociological considerations can determine what
might find that a company hasn't defined its customer demographic sufficiently because of too many reporting layers
social opinions, movements, or norms may affect the relevant
in the organizational structure.
company market and how the company branding aligns with them.
These may involve changing public opinion or the trends for new
Vulnerabilities: It's important for companies to determine security or process vulnerabilities to resolve them using
consumers, like those in regions or age ranges that are new to the
their revised strategies. For example, a vulnerability analysis might find that a company's operating systems and
company.
software aren't current, which can hinder its data management strategy and security.

Opportunities: The opportunities component of analysis refers to identifying resources a company might use to
enhance its performance. Examples might include adding a new physical or virtual location, investing more in
customer service strategies, selling across multiple platforms, and exploring mergers or partnerships.

Ref:
What Is a Strategic Analysis? (With Types and Guide) | Indeed.c
External strategic analysis om Canada

An external analysis involves investigating the industry and market trends to evaluate how effectively the company
can incorporate a viable competitive structure. It aims to determine any potential threats to company growth. You can
begin this process by identifying competitors, gathering relevant information about them, analyzing their strengths
and weaknesses, and determining any advantages the company might have. Companies can integrate data-driven
solutions into the system by combining external and internal analysis results to improve their performance. Here are
some objectives of an external analysis:
How to conduct a strategic analysis 4. Formulate a plan of action
The specific process of conducting an analysis can vary depending on the company. Here's a general
outline for producing an analysis that you can use as a basis for more specific strategic planning: A company can create a plan of action using all the information from the data collection and analysis. To start, a
company might first evaluate past and present strategies to determine their effectiveness. Strategies that produce effective
outcomes can combine into a new action plan and integrate into different processes. A team of analysts might replace
some older strategies with new ones more effective and relevant to the company's revised mission statement. Some new
strategies might involve forming new partnerships, altering the brand image, or updating business structures or
procedures.
1. Create a strategic analysis team Once the plan is complete, the team may create a report with their suggested plan of action for company executives to
Developing an analysis plan is a complex and vital business strategy that review. There may be an opportunity to receive input from different branches on new strategy selections. When
can influence the success of the company. To develop a team, companies executives approve the strategy, management can create a schedule for implementation.
may consider experienced employees to conduct an analysis successfully.
Some may contract professional analysts if they feel that might produce
optimal results. Once the company assembles the team, they can assign an
5. Repeat when necessary
appropriate budget and time with which the team may work.
Companies can often alter their approach when they adapt to new market conditions, new employees,
2. Examine current internal strategies and factors
competition, or new internal goals. As the company shifts, so do the outcomes of the analysis process. This
Once the company assembles an analysis team, it can start the internal
means that it may be useful for companies to consider long-term strategic planning options. They can also
analysis. It may begin with a review of the vision and mission statement
choose to implement annual strategic analyses to ensure that they have an updated understanding of the
of the company to establish specific and actionable goals. This can be a
strengths and weaknesses of each strategy.
useful framework against which strategists might compare organizational
past, present, and future actions. They can then complete a SWOT
analysis, focusing on factors like financial success, operational success,
Ref: What Is a Strategic Analysis? (With Types and Guide) | Indeed.com Canada
and employee satisfaction.
3. Determine external factors

After understanding the current internal company standing, the strategists The essential elements in business strategy
may complete a PESTLE analysis to examine the political, economic,
social, technological, legal, and environmental factors that can influence Your business strategy is your roadmap for decision-making and guides you toward success. The most critical
the company's success. To do this, analysts can identify the most elements of a business strategy may vary depending on the industry, company size, and specific objectives of your
important external factors, then determine the variables involved in business, but here are some key components that are essential to any business strategy:
certain patterns. Using the information from the analysis, they can predict
the impact the external factors may have on the company in the future. 1. Customers
Analysis may also help decide which factors to prioritize in their strategic If your business were a car, your customers would be the wheels; without them, you aren’t going anywhere.
plan, producing a system that addresses issues more efficiently. Whether you want to develop new products, scale your operations, or increase sales, customers should be at the
forefront of your strategy. Market research helps better understand your customers’ needs, preferences, and
behaviors. By involving customers in your business strategy, you build stronger relationships with them and
ultimately drive business growth.
2. SWOT analysis Ref: The evolution of business strategy; what matters now? - Influx
A SWOT analysis is a method for assessing strengths, weaknesses,
opportunities, and threats. It helps to identify areas where a business Definition of a business plan vs. a strategic plan
can capitalize on its strengths, address its flaws, and take advantage
of opportunities while mitigating potential threats. A strategic plan is essential for already established organizations looking for a way to manage and implement
their strategic direction and future growth. Strategic planning is future-focused and serves as a roadmap to
outline where the organization is going over the next 3-5 years (or more) and the steps it will take to get there.
3. Competitive analysis
A competitive analysis examines your competitors’ features, market A strategic plan serves 6 functions for an organization that is striving to reach the next level of their growth:
share, pricing, marketing, differentiators, strengths, weaknesses,
geography, culture, and customer reviews. This analysis will help *Defines the purpose of the organization.
identify ways to differentiate from competitors and gain a *Builds on an organization’s competitive advantages.
competitive advantage. *Communicates the strategy to the staff.
*Prioritizes the financial needs of the organization.
4. Marketing and sales strategy *Directs the team to move from plan to action.
Your marketing strategy is a part of your business strategy because it *Creates long-term sustainability and growth impact
provides a game plan to promote products and services to your target
A business plan for new businesses, projects, or organizations serves these 5 functions:
market and converts potential customers into paying customers.
Marketing strategies should revolve around your value proposition. *Simplifies or explains the objectives and goals of your organization.
*Coordinates human resource management and determines operational requirements.
5. Financial plan *Secures funding for your organization.
Financial planning is an integral part of your business strategy *Evaluates potential business prospects.
because it keeps you on track as the company grows. It also helps to *Creates a framework for conceptualizing ideas.
allocate resources effectively and make informed financial decisions.
Understanding and planning your expenses includes budgeting, In other words, a strategic plan is utilized to direct the momentum and growth of an established company or
revenue projections, and other goals you aim to achieve. organization. In contrast, a business plan is meant to set the foundation of a newly (or not quite) developed company
by setting up its operational teams, strategizing ways to enter a new market, and obtaining funding.
6. Implementation plan A strategic plan focuses on long-term growth and the organization’s impact on the market and its customers.
Your implementation plan should outline the specific steps and Meanwhile, a business plan must focus more on the short-term, day-to-day operational functions. Often, new
timeline for implementing your business strategy. It should include businesses don’t have the capacity or resources to create a strategic plan, though developing a business plan with
clear action items, deadlines, and responsible parties. strategy elements is never a bad idea.

7. Monitoring and evaluating Business and strategic plans ultimately differ in several key areas–
Regularly monitor and evaluate the effectiveness of your business Time frame,
strategy and make adjustments as needed. From a data and results- target audience,
driven perspective, monitoring performance will help to keep your focus,
resource allocation,
team on track.
nature, and
scalability.
Time Frame
Resourcing
While both a strategic and business plan is forward-facing and focused on future
A strategic plan is critical to prioritizing resources (time, money, and people) to grow the revenue and
success, a business plan is focused on the more immediate future. A business plan
increase the return on investment. The strategic plan may start with reallocating current financial
normally looks ahead no further than one year. A business plan is set up to
resources already being utilized more strategically.
measure success within a 3- to 12-month timeframe and determines what steps a
business owner needs to take now to succeed.
A business plan will focus on the resources the business still needs to obtain, such as vendors, investors,
staff, and funding. A business plan is critical if new companies seek funding from banks or investors. It
A strategic plan generally covers the organizational plan over 3 to 5+ years. It is
will add accountability and transparency for the organization and tell the funding channels how they plan
set with future expansion and development in mind and sets up roadmaps for how
to grow their business operations and ROI in the first year of the business.
the organization will reach its desired future state.
The scalability of a business plan vs. strategic plan
Target Audience
Another way to grasp the difference is by understanding the difference in ‘scale’ between strategic and
A strategic plan is for established companies, businesses, organizations, and
business plans. Larger organizations with multiple business units and a wide variety of products
owners serious about growing their organizations. A strategic plan communicates
frequently start their annual planning process with a corporate-driven strategic plan. It is often followed
the organization’s direction to the staff and stakeholders. The strategic plan is
by departmental and marketing plans that work from the Strategic Plan.
communicated to the essential change makers in the organization who will have a
hand in making the progress happen.
Smaller and start-up companies typically use only a business plan to develop all aspects of operations of
the business on paper, obtain funding and then start the business.
A business plan could be for new businesses and entrepreneurs who are start-ups.
The target audience for the business plan could also be stakeholders, partners, or
Why understanding the differences between a business plan vs a strategic plan matters
investors. However, a business plan generally presents the entrepreneur’s ideas to
It is important to know the key differences between the two terms, despite often being used
a bank. It is meant to get the necessary people onboard to obtain the funding
interchangeably. But here’s a simple final explanation:
needed for the project.
A business plan explains how a new business will get off the ground. A strategic plan answers where an
Focus
established organization is going in the future and how they intend to reach that future state.
A strategic plan provides focus, direction, and action to move the organization
from where they are now to where they want to go. A strategic plan may consist of
A strategic plan also focuses on building a sustainable competitive advantage and is futuristic. A business
several months of studies, analyses, and other processes to gauge an organization’s
plan is used to assess the viability of a business opportunity and is more tactical.
current state. The strategy officers may conduct an internal and external analysis,
determine competitive advantages, and create a strategy roadmap. They may take
Ref: Difference between a Business vs Strategic Plan | OnStrategy (onstrategyhq.com)
the time to redefine their mission, vision,
and values statements.

Alternatively, a business plan provides a structure for ideas to define the business
initially. It maps out the more tactical beginning stages of the plan.
Economic analysis involves assessing or examining topics or issues from an economist’s perspective.
Economic analysis is the study of economic systems. It may also be a study of a production process or
an industry. The analysis aims to determine how effectively the economy or something within it is
operating.

Forecasting is a technique that uses historical data as inputs to make informed estimates that are
predictive in determining the direction of future trends.

A project risk assessment is a formal effort to identify and analyze risks that a project faces.

Competitive risk advantage is the path to sustainable competitive advantage. Successful decision makers
recognize that the future is uncertain. They consider the different potential outcomes and make choices
today which favor the likelihood of beneficial outcomes in the future. This is risk management.

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: Identifying and evaluating data
relevant to the company’s strategy

Product quality refers to how well a product satisfies customer needs, serves its purpose and meets
industry standards. When evaluating product quality, businesses consider several key factors, including
whether a product solves a problem, works efficiently or suits customers' purposes.

Logistics analysis is the technical planning a company will go through to manage the flow of goods or
information through various business channels. Large firms may have their own set of sub-units that
provide supply chain services such as packaging, shipping, warehousing and distributing.

IT Methods and System are the specific tools and procedures you can use to collect and analyze data.

An integrated metering system accurately accounts for the quantity of gas or liquid sold
during custody transfer. It measures the transfer volume or mass flow rate of a
product, monitors fluid properties to convert quantities to reference conditions for invoicing, and may
include analyzers to confirm composition or product quality.
How is strategy different from tactics? All three levels form the strategic framework of an organization:
Before we get into the details of building a strategy, it is vital to understand how a strategy differs from a tactic.
1. Corporate Level: Corporate level strategies are the strategic plans of an organisation’s top
While both terms are often interchangeably confused, they are two entirely different things: management. They form the mission and vision statement and have a fundamental impact on the
firm’s long-term performance. They guide decisions around growth, acquisitions, diversification
A strategy refers to an organization’s long-term goals and how it plans to reach them. In other words, it shows the and investments.
path to achieve the defined vision.
2. Business Level: Business level strategies integrate into the corporate vision, but with a focus on
A tactic refers to the specific actions taken to reach the set goals in line with the strategy. a specific business. At this level, the vision and objectives are turned into concrete strategies that
For example, company A’s strategy might be to become the cheapest provider in the smartphone market. Their inform how a business is going to compete in the market.
managers then need to negotiate with suppliers to reduce the costs of the electronic components used in production.
This is a tactic to achieve the set strategy. 3. Functional Level: Functional level strategies are designed to answer how functional
departments like Marketing, HR or R&D can support the defined business and corporate strategies
Levels of business strategies of an organization.

There are three levels at which strategies are typically used: The corporate, business and functional level. How do you formulate a business strategy?
 Define how to gain competitive advantage
The fourth step in the strategy formulation answers the question of how the set objectives are achieved.
Firms that sell in competitive industries need to define how they want to compete in the market, create demand and increase their
sales and margins.

Types of business strategies

Harvard Business School professor Michael E. Porter identified three types of generic strategies that businesses can choose
from when defining their competitive advantage:

*Cost Leadership,
*Differentiation, or
*Focus.

However, firms can also fail to pursue one of these generic strategies effectively. Porter refers to this as being “stuck in the
middle”
Set your top-level objectives .
After defining the vision, the next step in formulating a business strategy is to In this case, a company does not offer a product or service unique enough to entice customers to buy. At the same time, the price
set an organization’s top-level objectives. of the offering is too high to compete effectively in the market.
These objectives are usually focused on increasing a firm’s sales and profits, as
they ensure its existence and improve the shareholder value if publicly traded. Build a strategy framework
Based on the execution of the previous steps, a generic business strategy can be formulated.
Analyse your business and the market However, functions such as marketing or finance will not contribute effectively to this generic strategy unless it is translated into
Once the vision and objectives are defined, strategy builders need to more specific lower-level strategies.
become aware of their business’s strengths and weaknesses and
the opportunities and challenges in the marketplace.
This can be done using a SWOT analysis
(Strengths, Weaknesses, Opportunities, Threats):
Analyzing techniques in Business Analysis

What is business analysis?

Business analysis is the process of examining and evaluating business demands and identifying solutions to potential challenges. Essentially, companies use this process to help them better understand
how to meet their short-term and long-term business goals.

How to perform a business analysis

If you're interested in learning how you can conduct a business analysis effectively, here are four steps you can reference:

1. Understand the business's goals

Understanding the business's goals is an important foundation for business analysis because without knowing its goals, it's hard to determine what a company's needs are or how you can resolve its
challenges

2. Analyze business operations

Analyzing a company's business operations is useful for identifying where specific demands and requirements and exploring where challenges are present. For example, if your employer is a
manufacturer of children's toys, the organization's goal may be to become one of the top-selling children's toy manufacturers.

3. Develop a business plan

Once you understand the business's goals and have analyzed its daily operations, you can develop a company's business plan.

4. Evaluate the progress of the business plan

When you implement the business plan, you can periodically evaluate its progress with additional business analysis.

What jobs use business analysis?

Business analysts: A business analyst's primary duty is to help companies improve by using the business analysis process, which may be why their job title is like the process title.

Information security analysts: Information security analysts can use business analysis to help them identify where a company's security needs are and how to prevent potential security threats.

Quantitative analysts: Quantitative analysts use business analysis to help companies understand where their company has financial needs and how they can prevent potential financial challenges.

Data analysts: Data analysts may engage in business analysis to assist companies as they examine measurable results to ensure they identify areas for improvement and potential challenges that
might occur, based on information patterns.
6 common business analysis techniques
1. Brainstorming
Brainstorming is a business analysis technique where company leaders collaborate to examine and evaluate their business needs and where they can prevent potential issues to develop solutions for
existing ones. When using this technique, individuals might use design thinking methods like "saturate" and "group" to help them organize their business ideas. Doing this allows them to consider a
variety of perspectives and input when handling a project or creating innovative solutions.

2. SWOT analysis
The SWOT analysis focuses on four factors, which relate to its acronym. These factors are strengths, weaknesses, opportunities and threats.

3. MOST analysis
The MOST analysis also focuses on four factors related to its acronym. They stand for mission, objective, strategy and tactics. This technique prompts companies to think about how their mission
plays a role in their objectives or goals, as well as how they can build a strategy to meet their business needs and prevent potential challenges. They can then evaluate the different tactics or tools
they may use to implement their business strategy effectively. Businesses may choose to use this strategy if they want to make sure their operations are in line with their mission and values.

4. Business process modeling (BPM)

BPM examines current operational needs and works to anticipate future business needs so the company can address them before they occur. For example, you know the company currently needs
advanced technology, but with that advanced technology, it may also need more data security. When using this technique, you can reference the business model and plan in a way that makes sense
for the specific business. Typically, BPM also offers a rotational foundation to ensure the company periodically revisits its business analysis to make updates.

5. Use case modeling

Use case modeling focuses on illustrating the points of operation and user interactions throughout the business. For example, it might show the different production steps within the company and
where users interact with the brand, its products and services. You might find this business analysis technique commonly used when companies operate digitally, like e-commerce stores. Software
development companies may also use this technique to help them understand each user interaction prior to prototyping and designing applications.

6. User stories
The user stories technique focuses on basing business needs and challenges on user experiences and interactions. This might include using user personas or journey maps to better understand the
company's users, their needs and challenges. Personas are useful because they provide background information about who these users might be and journey maps are helpful because they highlight
where users might face challenges while using your product or service. Typically, this technique is common with digital companies or software developers, like the use case modeling technique.

Tips for business analysis best practices

*Here are some tips you can reference to help you use business analysis best practices:
*Understand the organization's short-term and long-term goals before beginning the business analysis process.
*Consider the mission or established values of the company when making business decisions.
*Gather insight from multiple company teams when conducting business analysis to gain more perspectives.
*Create a pro and con list for each business analysis technique to help you select the right one for the organization.
*Periodically conduct business analysis to help the company reach a higher return on investment levels.
*Continue to update the business plan with your analysis findings to ensure everything is up to date.
*Document updates to identify business patterns that you can address when revisiting business analysis.
*Examine the company's measurable results to identify where you might want to make changes or adjustments.
*Recognize who the company's stakeholders are and what results they expect from the company.