This article is about how to do strategic analysis of a company. Students get several homework and assignments related to how to do strategic analysis. This would be a good reference for students with their assignment and homework regarding strategic management. Strategic analysis of a company starts with analysis internal and external environment factors having an impact on business. A strategic analysis is also effective to determine opportunities and threats for the business within the market and also their strengths and weaknesses.
The company analysis is the first step to start the strategic analysis. A company analysis contains information related to history, existing environment and present perspective of the company. This analysis explores profile, growth, profitability, and culture that a company has at present time. At the same time, it includes future objectives of a business that are decided in the mission, vision, goals and objectives of the company that a company wants to achieve for long-term growth and sustainability in the industry. This stage helps to determine the strategic perspective of the business and also the relevancy of current strategies.
A clear goal and objective inspires to get competitive advantages that a company could obtain by analyzing its internal and external environment. SWOT analysis is an important part of the strategic analysis that contains internal and external environment analysis of the company. Information for strengths and weaknesses of the company determines internal assessment and opportunities and threats external assessment. In this step, analysts should make a proper matrix for internal and external elements that helps to make effective strategic decisions.
The next step for strategic analysis is to perform industry analysis to determine existing level of competition in the market. This analysis provides a clear description of the industry in which company is operating. Additionally, it also states trends and strategic opportunities for a company within the industry. In this analysis, a company can analyze bargaining power of suppliers and customers, threats from new entrants and substitute of the company and rivalry among the existing companies that helps to make better strategic decisions to achieve competitive advantage.
BCG matrix is another important element of the strategic analysis that determines portfolio of a business unit. BCG matrix plays an important role to ensure long-term value creation through determining two dimensions namely market share and market growth of the company. BCG matrix helps to understand the strategic mistakes of company and in making strategic for their reduction. It helps to determine the strategic position of the business within the industry.
PEST analysis is also a useful tool for strategic analysis that provides big picture to understand the external environment in which a company is functioning. It provides several factors that may affect the internal and external environment of the. It helps in determining the strategic factors that should be considered by a firm in its international business environment. Thus, through these tools an organization could do strategic analysis and may frame better strategies.