The strategic analysis process is geared to help you to understand your current market position and your desired market position. It involves extensive planning, research and examination. The process helps you find the most strategic approach to gain in edge on your competitors.
It’s imperative to properly use the analytical tools and techniques. The slightest error could lead to unintended outcomes. Therefore, it’s advised to focus when providing input for techniques or frameworks.
What is Strategic Analysis
What is the definition of strategic analysis? The strategic analysis refers to a set of tools and techniques used for research and examination. These tools and techniques are structured to address the current situation of your organization; more specifically, “where are we now”? More importantly, these tools help you develop a better understanding of the 3 C’s (customer, competitor, company).
Strategic Analysis Process
The strategic analysis process usually takes place during the stages of strategic thinking and strategic planning Thinking provides you with an understanding of the destination or goal you plan to reach; and what it takes to get there. Whereas, planning gives you a blueprint of strategies and tactics to reach your end goal. Nevertheless, both processes are interdependent and key components of the strategic analysis process.
Typical steps for strategic analysis process;
- Collecting data & information, e.g., (surveys, focus groups, interviews)
- Analyzing the effect of the 4 P’s (marketing mix) has on prospects and customers
- Addressing your findings in a productive manner that will give you a competitive advantage
- Reviewing how the industry and the firm operate from a broad perspective, e.g., (scanning the current sales volume)
- Identify matters that may compromise the success of your agenda by performing a risk analysis
Strategic analysis is a central process for producing your marketing strategy. It supplies you with information that enables you to formulate and implement your marketing goals and objectives.
Above all, you must conduct this analysis to identify strengths, weaknesses and opportunities. This analysis contains both qualitative and quantitative analytical techniques that help you make better decisions. Ultimately, you can get the most out of your plan and strategy.
Common Tools and Techniques
There are many tools and techniques that firms use to examine specific external & internal elements. The purpose of using these tools and techniques is to develop insight and data regarding external and internal environmental operations that focuses on classifying potential futuristic opportunities, threats and end goals.
Common tools and techniques of the strategic analysis:
- Environmental analysis — identifying external/internal factors that may impact the company
- Gap analysis — comparing the current performance and desired performance
- Market segmentation analysis — dividing target market/audience into groups and subgroups
- PEST/PESTLE analysis — examination of political, economic, socio-cultural, technological, legal and environmental business components
- Situational analysis — external and internal investigation of a business environment to understand organizational capabilities
- SWOT analysis — identifying internal/external strengths, weaknesses, opportunities and threats
- Value chain analysis — strategic activities executed to deliver valuable products
Every firm is different, therefore each firm will use different tools and techniques to address their current state or affairs. For instance, a corporation that operates on an international scale may use an analytical technique known as the Herfindahl index to measure the size of their firm.
Likewise, a family business that operates locally would not benefit from using the Herfindahl index tool. Generally speaking, the following factors determine the technique or tool a firm uses; condition or root of the problem, data availability, environmental problems, goals and objectives, motivation or time and skill level of the analyst.