Strategic Analysis

©2007JohnWiley&Sons
Presented By:
Archana
Strategic Analysis

The Concept of Strategy

• The determination of the long run goals
and objectives of an enterprise, the
adoption of courses of action and the
allocation of resources necessary for
carrying out these goals.

Common Elements in Successful Strategy
Successful
Strategy
Profound
understanding of
the competitive
environment
Objective
appraisal of
resources
Long-term, simple
and agreed upon
objectives
$
EFFECTIVE IMPLEMENTATION

CORPORATE STRATEGIES
• It is a overall managerial game plan.
• How management plans to achieve
mission and objectives of the organization.

Comprehensive Strategy-
Formulation Framework
Stage 1:
The Input Stage
Stage 2:
The Matching Stage
Stage 3:
The Decision Stage

Strategy-Formulation Analytical Framework
Stage 1:
The Input Stage
Internal Factor Evaluation
Matrix (IFE)
External Factor Evaluation
Matrix (EFE)
Competitive Profile Matrix
(CPM)

Stage 2:
The Matching Stage
Portfolio Analysis
GE Analysis
SWOT Analysis
Industry Analysis
Grand Strategy Matrix

Alternatives for Growth
Market Penetration
Market Development
Product Development
Expansion of
Exiting Business
Vertical Integration
Alternatives for growth
Related
Diversification into
New Business
Unrelated

Portfolio Analysis
• Corporate portfolio analysis defined as a
set of technique that helps strategist in
taking strategic decision with regard to
individual product or business in a firms
portfolio.
• It is primarily used for competitive analysis
and strategic planning in multi-product and
multi-business firm.

Advantage of portfolio
analysis
• The main advantage in adopting a portfolio approach is that
resources could be targeted at a corporate level to those business
that posses the greatest potential for creating competitive
advantage.
• For e.g.
A diversified company may decide to divert resources from its cash
rich business to more prospective ones that hold promise of a faster
growth so that the company achieve its corporate level objectives in
an optimal manner.

• Encourage top management to evaluate
each business individually; to set
objectives and consider resources.
• It stimulates use of external data to
supplement management judgment.
• It graphic representation makes
interpretation and communication easier.

GE Matrix/McMinsey Matrix

Importance of GE matrix
• It incorporate a large variety of strategic
variables like the market share and the
industry size.
• The GE-matrix is also a powerful
analytical tool to channel corporate
resources to business that combine
medium to high industry attractiveness
with average to strong business
strength/or competitive position.

• Other benefits include a more perceptive
understanding of the businesses, leading
to better strategic decision and availability
of an interesting graphic aids for
communication.

SWOT Strategy
Strengths
Weaknesses
Opportunities
Threats
SWOT
SO
Strategies
Use a firm’s
internal strengths
to take advantage
of external
opportunities

Ch 6 -17
WO Strategies
Improving internal
weaknesses by
taking advantage
of external
opportunities
WO
Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT

Ch 6 -18
ST Strategies
Use a firm’s
strengths
to avoid or
reduce the impact
of external
threats
ST
Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT

Ch 6 -19
WT Strategies
Defensive tactics
aimed at reducing
internal
weaknesses &
avoiding
environmental
threats
WT
Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT

THE INDUSTRY
ENVIRONMENT
• Suppliers
• Competitors
• Customers
Social structure
The national/
international
economy
Technology
Government
& Politics
The natural
environment
Demographic
structure
Social structure
From Environmental Analysis
to Industry Analysis
•The Industry Environment lies at the core of the Macro Environment.
•The Macro Environment impacts the firm through its effect on the Industry
Environment.

Porter’s Five Forces of Competition Framework
SUPPLIERS
POTENTIAL
ENTRANTS
SUBSTITUTES
BUYERS
INDUSTRY
COMPETITORS
Rivalry among
existing firms
Bargaining power of suppliers
Bargaining power of buyers
Threat of
New
entrants
Threat of
substitutes

Neutralizing The Five
Competitive Forces
Force
Entry
Rivalry
Substitutes
Buyers
Suppliers
Method for Neutralizing Force
Erecting barriers (isolating
mechanisms) create & exploit economies of
scale, aggressive deterrence, design in switching
costs, etc.
Compete on nonprice dimensions:
cost leadership, differentiation, cooperation, etc.
Improve attractiveness compared to
substitutes: better service, more features, etc..
Reduce buyer uniqueness: forward
integrate, differentiate product, new customers, etc..
Reduce supplier uniqueness: backward
integrate, obtain minority position, second source, etc..

Life Cycle Analysis
• Life cycle is a conceptual model that
suggests products, markets, businesses,
and industries evolved through sequential
stages of introduction, growth, maturity,
and decline.

An Alternate Model of Industry Life Cycle
Time
Salesvolume
Emergence Convergence Coexistence Dominance
Established
Industry
Emerging Industry

Advantage of Life Cycle
Analysis
• It can be used to diagnose a portfolio of products
(markets, business, and industries) in order to establish
the stage at which each of them exist.
• Attention to be paid on the business that are in the
decline stage by adopting the selective harvesting and
retrenchment strategies.
• It provides a useful frame work for analysis for the
formulation of business level strategies.

THANK YOU

Strategic Analysis

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