Strategic analysis is the process of analyzing a company and its operating environment in order to come up with a suitable strategy. The exact definition of strategic analysis may vary a bit from an academic or business perspective.
Strategic Analysis is the objective study of the environmental factors, both internal and external, which are considered in process of strategic choice. It is the process of conducting research on the business environment within which an organization operates and on the organization itself, in order to formulate strategy.
Two types of Strategic Analysis can be done by different organizations for future planning. They are:
- Internal Analysis (SWOT)
- External Analysis (PESTLE)
- Internal Environment Analysis
- External Environment Analysis
- How to do SWOT Analysis
- How to do PESTLE Analysis
Generally, detailed analysis of a company should include eight areas:
- The history, development, and growth of the company over time
- The identification of the company’s internal strengths and weaknesses
- The nature of the external environment surrounding the company
- A SWOT analysis
- The kind of corporate-level strategy that the company is pursuing
- The nature of the company’s business-level strategy
- The company’s structure and control systems and how they match its strategy
- Recommendation
Environment Analysis and Scanning
The forces, conditions, situations, events etc. that impact the organization is referred to collectively as the organization’s environment.
The ever-changing internal (controllable) as well as external (uncontrollable) forces of environment pose numerous challenges to the business firms to adjust and adapt itself to the realities of such environment.
To address these challenges, business leaders conduct an environmental analysis and develop policies and processes that adapt the firms operations and products to this environment.
Advantages of Environment Analysis and Scanning:
- Identification of Strength
- Identification of Weakness
- Identification of Opportunities
- Identification of Threat
- Optimum Use of Resources
- Survival and Growth
- Expansion and Diversification
- Long Term Planning of Business Strategy
- Aids Decision Making
- Flexibility in Operations
- Corporate Image
After conducting a detailed strategic analysis, a firm can proceed with Strategy Formulation.
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