Strategic Analysis Overview Quiz

Study Notes

Strategic analysis interprets data to inform decisions aligning with organizational goals.
It assesses internal and external factors impacting organizational success.

Examines and evaluates external factors influencing an organization.
Includes macro (e.g., global trends) and micro (e.g., local market) factors for informed strategic decisions.

A comprehensive framework covering a wide range of external factors.
Often the first step in environmental analysis.
Understanding interrelationships between PESTEL factors is crucial for business operations.
Example: For an electric car manufacturer, PESTEL factors include government incentives (Political), rising oil prices (Economic), growing environmental awareness (Social), advancements in battery technology (Technological), stricter emissions regulations (Environmental), and new safety standards (Legal).

Assesses the ease of new companies entering the industry.
Easy entry increases competition and reduces market share for existing companies.
Factors include barriers to entry (high startup costs, access to technology, brand loyalty).

Examines the power of suppliers to influence prices and quality.
Few suppliers or essential materials grant suppliers more power.
Factors include the number of suppliers, product uniqueness, and switching costs.

Assesses the power of customers to negotiate prices and demand quality.
Many choices or large purchase quantities increase buyer power.
Factors include the number of buyers, buyer importance, and availability of alternatives.

Examines the likelihood of customers choosing alternative offerings.
Many substitutes limit pricing power.
Factors include substitute availability, performance, price, and switching costs.

Assesses the intensity of competition among existing companies.
High rivalry can lead to price wars and reduced profitability.
Factors include the number of competitors, industry growth rate, and product differentiation.

The example uses a small city bakery to illustrate how Porter's Five Forces would apply to a specific business. Details on each force's application to the bakery are omitted from the provided text.