Developing Your Company’s Strategic Analysis

Strategic analysis consists of studying a company, its macroenvironment, and its operational environment to develop a strategy. The definition of strategic analysis may differ from an academic perspective, case study, or business perspective, but the process involves common steps, including:

  • Identify and evaluate information on the macroenvironment, general environment and operational environment relevant to the company’s strategy
  • Establish the dimensions of the external and internal environments to be analyzed, and
  • Use analytic methods such as market study, climate research, SWOT analysis, key question analysis, PESTEL analysis, value chain analysis, and Porter’s Five Forces analysis, among others.

In more detail, the strategic analysis includes:

  1. Analyze the results of current strategies.

A company needs to develop an analysis of its current strategies. Internal environment considerations include issues such as operational inefficiencies, employee commitment, and financial constraints. External environmental considerations include economic, political, sociocultural, demographic, and technological trends, in the physical environment and in the competitive environment.

  1. Review the business model.

Developing a new business model means planning the fundamentals of a company and its evolution in the market, using elements such as value proposition, key partnerships, relationships, key customers, channels, costs and revenues, among others. Since the scenario is dynamic, revisiting the business model periodically is critical for the company to remain competitive.

  1. Assess the effectiveness of existing strategies.

One of the main objectives of a strategic analysis is to evaluate the effectiveness of the current strategy within the actual business environment. Strategists should ask questions like,

  • Did the company’s strategy achieve the projected results?
  • Have the strategic objectives, based in the future vision and established in the strategic map, been achieved?
  • Were the goals of the KPIs obtained?
  1. Developing strategic objectives aligned with the vision of the future.

After a thorough review of corporate statements, business, vision, mission and values, it is essential to review the strategic objectives in each of the perspectives of the Balanced Scorecard. Environmental changes can determine changes in objectives.

  1. Formulate strategic initiatives.

Once the strategic objectives have been redefined, the next step is to enunciate new strategic initiatives aligned with the objectives. Executives involved in the development of strategic initiatives can propose ways to incorporate new technologies, reduce costs, develop new products/services, improve operations, better serve customers, and others. Potential strategic alternatives include changes in capital structure, changes in supply chain management, or any other alternative stemming from the revised business model.

  1. Establish metrics and KPIs to monitor strategies.

Once the strategic objectives are defined, it is crucial to establish the KPIs that will be used to monitor the achievement of the targets and, consequently, the objectives.

  1. Implement the strategy.

Finally, after evaluating strategies and proposing alternatives, the time has come to implement it. After evaluating all possible strategic alternatives, the company chooses to implement the most viable and profitable strategy. The implementation of strategic initiatives is based on the alignment of executive decisions and defined strategies.

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