Strategic Analysis
In English, strategic analysis is known as (Strategic Analysis). The term ‘strategy’ is derived from the Greek word (strategos), which initially referred to military plans and operations. Over time, it has become a critical component within the field of management, aiding managers in establishing business objectives, crafting plans, and contributing to their realization by utilizing available resources. Consequently, strategy serves as a vital tool aimed at enhancing various business sectors.
Strategic analysis can be defined as a set of techniques and methodologies that align an organization’s objectives with its operational environment. This is achieved through a comprehensive assessment of all relevant factors, enabling the identification of suitable options and methods to execute the work while acknowledging the inherent risks involved. Therefore, minimizing risks is a crucial aspect of the process by closely examining all proposed alternatives that could be implemented.
Stages of Strategic Analysis
The process of strategic analysis is built upon several stages, which include:
Environmental Analysis
This involves examining both the internal and external environments related to the organization. The strategic analysis assesses targeted consumer groups and determines the nature of the products or services they seek. Based on this assessment, decisions are then made, such as discontinuing the production of certain goods or services and shifting focus to new offerings, as well as modifying existing marketing strategies and conducting specific studies to establish a novel marketing approach.
Strategic Formulation
Strategic formulation entails developing appropriate frameworks based on the findings derived from the analysis phase. This stage is crucial for crafting work plans and preparing staff and resources for the upcoming execution.
Implementation
This refers to the actual application of the strategy that will be utilized in the company’s forthcoming operational phase. The goal is for all internal and external components to adapt seamlessly, facilitating the execution of related tasks.
Evaluation
The evaluation stage ensures that the strategy is effectively implemented and is progressing along the correct path. It plays a pivotal role in identifying any errors that may arise and facilitates the development of suitable solutions.
Tools for Strategic Analysis
Several tools are employed in strategic analysis to achieve the specific objectives of a project or activity. These tools include:
SWOT Analysis
Commonly abbreviated as (SWOT), this tool encompasses four key components: Strengths, Weaknesses, Opportunities, and Threats. Each of these elements significantly influences both the internal and external environments of the organization.
Strengths
This refers to the resources and capabilities the organization possesses that enable it to effectively pursue and achieve its operational goals. For instance, leveraging strategic plans to navigate the business environment successfully.
Weaknesses
These are factors that hinder the organization’s performance and limit its competitiveness against other businesses. An example might include a lack of available resources.
Opportunities
Opportunities are potential future events or trends that can lead to favorable outcomes, such as an increase in company revenue following the launch of a new product or service.
Threats
Threats represent elements that negatively impact the organization’s ability to meet its objectives. They could result in losses if not addressed appropriately, such as a decrease in the company’s stock price.
Integrated Growth
This strategy focuses on identifying new opportunities or ventures that align with the organization’s core activities and contribute to its growth. Integrated growth is divided into two types:
- Forward Integration: This involves the organization advancing to a new stage by directly engaging with customers, usually through the exclusive distribution of a specific product.
- Backward Integration: This entails the organization revisiting a previous stage of its operations to enhance and modify a specific product, ultimately increasing its sales volume.
Business Units
This strategy is based on four operational units associated with the organization’s business activities:
- Foundation: The organization’s ability to increase its capital through market expansion.
- Survival: The organization’s capability to sustain its operations as long as possible through strategic planning.
- Harvesting: The strategy of minimizing investment to preserve profits stemming from implementing a specific strategy.
- Divestiture: The sale of a branch of the organization according to strategic plans, allowing the reallocation of resources to enhance other branches’ growth.