Business Frameworks: Strategic Analysis

• Business frameworks are structures that help organizations analyze, plan, and execute strategies effectively
• They offer a systematic approach to problem-solving and decision-making

Strategic Analysis Frameworks

• SWOT Analysis: Evaluates Strengths, Weaknesses, Opportunities, and Threats to provide a comprehensive view of an organization's strategic position
  • Strengths: Internal attributes that give an organization a competitive advantage
  • Weaknesses: Internal attributes that put an organization at a disadvantage
  • Opportunities: External factors that an organization can exploit to its advantage
  • Threats: External factors that can cause trouble for an organization
• Porter's Five Forces: Analyzes the competitive intensity and attractiveness of an industry
  • Threat of New Entrants: How easy or difficult it is for new competitors to enter the market
  • Bargaining Power of Suppliers: The ability of suppliers to drive up prices
  • Bargaining Power of Buyers: The ability of customers to drive down prices
  • Threat of Substitute Products or Services: The availability of alternatives
  • Rivalry Among Existing Competitors: The intensity of competition among existing firms
• PESTLE Analysis: Examines Political, Economic, Social, Technological, Legal, and Environmental factors that can affect a business
  • Political: Government policies, regulations, and political stability
  • Economic: Economic growth, interest rates, inflation, and unemployment
  • Social: Cultural norms, values, demographics, and lifestyle changes
  • Technological: Technological advancements, automation, and research and development
  • Legal: Laws and regulations related to employment, consumer protection, and intellectual property
  • Environmental: Environmental concerns, sustainability, and regulations

Strategy Formulation Frameworks

• Ansoff Matrix: Helps organizations choose a growth strategy based on products and markets
  • Market Penetration: Selling more of existing products in existing markets
  • Market Development: Selling existing products in new markets
  • Product Development: Selling new products in existing markets
  • Diversification: Selling new products in new markets
• BCG Matrix: Classifies business units or products based on market growth rate and relative market share
  • Stars: High market share in high-growth markets; require significant investment
  • Cash Cows: High market share in low-growth markets; generate excess cash
  • Question Marks: Low market share in high-growth markets; require careful consideration
  • Dogs: Low market share in low-growth markets; may be divested
• Value Chain Analysis: Identifies primary and support activities that add value to a product or service
  • Primary Activities: Directly involved in creating and delivering a product or service (e.g., inbound logistics, operations, outbound logistics, marketing and sales, service)
  • Support Activities: Support the primary activities (e.g., procurement, technology development, human resource management, infrastructure)
• Blue Ocean Strategy: Creating new market spaces where competition is irrelevant
  • Focus on creating new demand, rather than competing in existing markets
  • Aims to make the competition irrelevant

Decision-Making Frameworks

• Decision Matrix: Evaluates options based on weighted criteria to make informed decisions
  • Identify criteria, assign weights, score each option, and calculate the weighted scores
• Cost-Benefit Analysis: Compares the costs and benefits of a decision to determine its feasibility
  • Quantifies costs and benefits in monetary terms
• The OODA Loop: Observe, Orient, Decide, Act; a decision-making process that emphasizes agility and adaptability
  • Observe: Gather information about the situation
  • Orient: Analyze and interpret the information
  • Decide: Choose a course of action
  • Act: Implement the decision and monitor the results

Innovation Frameworks

• Design Thinking: A human-centered approach to problem-solving that emphasizes empathy, experimentation, and iteration
  • Empathize, Define, Ideate, Prototype, Test
• Lean Startup: Emphasizes validated learning, rapid iteration, and customer feedback
  • Build-Measure-Learn loop
• Stage-Gate Model: Divides a project into stages with defined deliverables and gate reviews to ensure quality and viability
  • Stages: Distinct phases of project execution
  • Gates: Decision points to assess progress and decide whether to proceed

Project Management Frameworks

• Waterfall: A linear, sequential approach to project management
  • Requirements are defined upfront, and each phase is completed before moving to the next
• Agile: An iterative and incremental approach to project management that emphasizes flexibility and collaboration
  • Scrum and Kanban are popular agile frameworks
• Critical Path Method (CPM): Identifies the longest sequence of activities that determines the project's duration
  • Used to optimize project schedules and resource allocation

Organizational Structure Frameworks

• Functional Structure: Organizes departments based on specialized functions (e.g., marketing, finance, operations)
  • Suited for stable environments
• Divisional Structure: Organizes departments based on product lines, geographic regions, or customer segments
  • Suited for diverse organizations
• Matrix Structure: Combines functional and divisional structures, creating cross-functional teams
  • Can improve communication and collaboration but may lead to conflicts
• Network Structure: A decentralized structure that relies on external partners and alliances
  • Suited for dynamic and global environments

Marketing Frameworks

• 4Ps of Marketing: Product, Price, Place, Promotion
  • Product: Features, benefits, and quality of the offering
  • Price: Pricing strategy and tactics
  • Place: Distribution channels and availability
  • Promotion: Advertising, public relations, and sales promotion
• Marketing Funnel (AIDA): Awareness, Interest, Desire, Action
  • A model that describes the stages a customer goes through when making a purchase
• Customer Relationship Management (CRM): Strategies and technologies used to manage and analyze customer interactions and data
  • Aims to improve customer satisfaction and loyalty

Financial Analysis Frameworks

• Ratio Analysis: Evaluating financial performance using key ratios (e.g., profitability, liquidity, solvency)
  • Profitability ratios: Measure a company's ability to generate profits
  • Liquidity ratios: Measure a company's ability to meet short-term obligations
  • Solvency ratios: Measure a company's ability to meet long-term obligations
• Discounted Cash Flow (DCF): Valuing an investment based on its expected future cash flows
  • Considers the time value of money
• Break-Even Analysis: Determining the point at which total revenue equals total costs
  • Helps in pricing and cost management decisions

Change Management Frameworks

• Lewin's Change Management Model: Unfreeze, Change, Refreeze
  • Unfreeze: Prepare the organization for change
  • Change: Implement the changes
  • Refreeze: Reinforce the changes to make them permanent
• Kotter's 8-Step Change Model: Creates a sense of urgency, builds a guiding coalition, forms a strategic vision, enlists a volunteer army, enables action, generates short-term wins, sustains acceleration, and institutes change
  • A comprehensive approach to managing organizational change
• ADKAR Model: Awareness, Desire, Knowledge, Ability, Reinforcement
  • Focuses on individual change management

Important Considerations

• No single framework is universally applicable; the choice depends on the specific situation and organizational goals
• Frameworks should be adapted and customized to fit the unique context of an organization
• Combining multiple frameworks can provide a more comprehensive and nuanced perspective
• Regular review and refinement of chosen frameworks is essential to ensure their continued relevance and effectiveness

Explore business frameworks for strategic analysis. These structures help organizations analyze, plan, and execute strategies effectively, offering a systematic approach to problem-solving and decision-making.