Taking decisions is a daily routine for any business – its growth and profits depend on it. Conducting a strategic analysis can give you a lot of valuable information about internal and external factors that affect your business. What does it rely on and why should you use it? Read on to find out more.

What is a strategic analysis? – table of contents:

  1. What is a strategic analysis?
  2. Methods of strategic analysis
  3. How to choose the right method?
  4. Stages of strategic analysis
  5. Why to use a strategic analysis?

What is a strategic analysis?

A strategic analysis is the first stage of strategic management. It is a study that allows you to assess the company’s performance and, at the same time, set new directions for further growth, keeping in mind a dynamic market environment. To a great extent, it focuses on checking external and internal factors affecting the condition of the company, rather than fixing organizational mistakes.

strategic analysis

Methods of strategic analysis

The ways of examining the condition and capabilities of an enterprise can be divided into internal and external ones. Using both of them will allow you to gain a broader perspective and keep your assessment objective.

Porter’s five forces analysis

It assumes that the success of a company in the macro-environment depends on the following factors:

  • competition in the industry,
  • potential of new entrants into the industry,
  • power of suppliers,
  • power of customers,
  • threat of substitute products.

Strategic group mapping

It is a tool that helps determine the competitiveness of other players in the market. Companies in a given industry are divided into strategic groups, which are then presented with a map. Thanks to such a graphic presentation, you can easily identify strategic opportunities and problems.

CSF analysis

It is a method helping to identify the characteristics of an organization that have the biggest impact on achieving its goals. After making a list of these characteristics and determining a degree of their influence, you get its strategic profile. In this way, you should analyze both your company and at least one of your competitors. Putting them together will allow you to get insight into your strengths and weaknesses.

PEST analysis

It defines the basic factors of the external environment that determine the functioning and position of an organization. These are:

  • political factors
  • economic factors
  • social factors
  • technological factors

By assessing the macro-environment, it helps set the company’s future strategy.

How to choose the right method?

There is no single, perfect way to verify a company’s performance. It is too complex an entity that depends on many internal and external factors. Therefore, in practice, it is necessary to choose several available methods depending on the nature, position and objectives of the organization. This is not an easy task as it requires theoretical knowledge and, above all, experience. Undoubtedly, it involves a lot of effort and costs, but the end result is definitely worth it.

Stages of strategic analysis

Before making a decision that is important for the future of the organization, it is necessary to become familiar with its nature and position in the market. You will conduct an effective strategic analysis by following the steps below:

  1. Collect as much data as possible
    • Describe the object of study, define the industry the company operates in and decide whether you analyze the whole organization or just a specific department.
    • Talk to your team, starting with the members of the board, senior and lower management, ending with regular employees. Talking to them can provide you with valuable information about existing irregularities.
    • Review the company’s activities in the selected period. What results did they bring?
  2. Evaluate your business processes
    • Use the analytical methods mentioned in the article. It’s recommended that you use several of them to look at the situation from different perspectives.
    • Draw conclusions and suggest possible solutions.
  3. Prepare and present guidelines to improve the company’s performance– in the form of a report or a presentation. The visual aspect and a method of communication are as important as the content.
  4. Supervise the process of implementing changes and, if necessary, make improvements.
  5. Contact stakeholders to have control over the implemented procedures.

Why to use a strategic analysis?

Conducting a comprehensive assessment of a company is time-consuming and costly. You may even need to slow down operations in other areas to focus on an in-depth analysis. However, it will certainly help you to:

  • learn the specifics of the market and the sector you operate in,
  • get to know your strengths and opportunities for further development, as well as what steps you should take in that direction,
  • identify your weaknesses and reduce their impact or, if possible, eliminate them,
  • gain a competitive advantage.

The pace of development and the emergence of new players in the market has made it necessary to have a good management strategy. Using the tools outlined above will allow you to acknowledge your position among your competitors, highlight your company’s strengths and face business challenges.

Read also: SWOT analysis of online stores.

If you like our content, join our busy bees community on Facebook, Twitter, LinkedIn, Instagram, YouTube, Pinterest, TikTok.

What is a strategic analysis? Finding your path to success andy nichols avatar 1background

Author: Andy Nichols

A problem solver with 5 different degrees and endless reserves of motivation. This makes him a perfect Business Owner & Manager. When searching for employees and partners, openness and curiosity of the world are qualities he values the most.