Strategy Analysis & Choice - Recap PDF

Asres A. Recapitulation on Strategy Analysis and Choice Strategy Analysis is the process of evaluating an organization's strategic position, identifying opportunities, threats, and aligning actions to achieve goals. It involves examining internal and external environments, competit...

Asres A. Recapitulation on Strategy Analysis and Choice Strategy Analysis is the process of evaluating an organization's strategic position, identifying opportunities, threats, and aligning actions to achieve goals. It involves examining internal and external environments, competitive positioning, and long-term objectives to ensure success. Below are key frameworks and tools commonly used for strategy analysis: 1. SWOT Analysis - Strengths: Internal capabilities that provide a competitive edge. - Weaknesses: Internal limitations or areas of improvement. - Opportunities: External factors the organization can capitalize on. - Threats: External challenges or risks that might impact performance. 2. PESTEL Analysis Focuses on the external macro-environment: - Political: Government policies, trade restrictions, and political stability, etc. - Economic: Market trends, inflation rates, and economic growth, etc. - Social: Cultural trends, demographics, and consumer behavior. - Technological: Advancements and innovations impacting the industry. - Environmental: Sustainability, resource availability, and ecological impact. - Legal: Regulations, compliance, and legal challenges. 3. Porter’s Five Forces Evaluates the competitive environment in an industry: - Threat of New Entrants - Bargaining Power of Suppliers 1  Asres A. - Bargaining Power of Buyers - Threat of Substitutes - Industry Rivalry 4. VRIO Framework Focuses on analyzing internal resources and capabilities: - Value: Does the resource provide value or a competitive advantage? - Rarity: Is the resource unique or rare in the industry? - Imitability: Is it costly or difficult to replicate? - Organization: Is the organization structured to leverage the resource? 5. Value Chain Analysis Analyzes activities to determine how value is created for customers: - Primary Activities: Directly add value (e.g., operations, marketing, logistics). - Support Activities: Indirectly enhance value (e.g., HR, procurement, R&D). 6. Balanced Scorecard (BSC) Aligns strategy with performance across four perspectives: - Financial: Revenue growth, cost management. - Customer: Satisfaction, retention, and market share. - Internal Processes: Operational efficiency, innovation, etc. - Learning & Growth: Employee skills, organizational culture, etc. 2  Asres A. 7. Ansoff Matrix Assesses growth strategies based on products and markets: - Market Penetration: Increase market share in existing markets. - Market Development: Expand into new markets. - Product Development: Introduce new products to existing markets. - Diversification: Enter new markets with new products. 8. Blue Ocean Strategy Focuses on creating uncontested market space to reduce competition. Core steps: - Identify new value propositions. - Reduce factors customers don’t value. - Increase unique offerings that attract untapped customers. 9. McKinsey 7S Framework Analyzes organizational alignment with strategy: - Strategy: The plan to achieve objectives. - Structure: Organizational design. - Systems: Processes and technology. - Shared Values: Core company culture. - Style: Leadership and management approach. - Staff: Workforce skills and competencies. - Skills: Key capabilities of the organization. 3  Asres A. 10. Scenario Planning Anticipates multiple future scenarios to adapt strategy: - Identify potential external disruptions (e.g., economic, technological changes, etc.). - Create strategies for best, worst, and likely-case scenarios. 11. GE-McKinsey Matrix A tool to prioritize investment in business units or strategies: - Evaluates business strength and industry attractiveness. - Classifies units as "Grow," "Hold," or "Harvest." 12. The BCG Matrix (Boston Consulting Group Matrix) A strategic tool used by businesses to evaluate their product portfolio or business units. It helps organizations allocate resources and identify growth opportunities based on market growth rate and relative market share. 13. SPACE Matrix (Strategic Position and Action Evaluation Matrix) A strategic management tool used to determine the most suitable strategic approach for a business. It evaluates a company’s internal strengths and weaknesses along with external opportunities and threats, enabling strategic positioning in one of four quadrants: Aggressive, Competitive, Conservative, or Defensive. 14. The Competitive Profile Matrix (CPM) A strategic management tool used to evaluate a company's competitive position relative to its major competitors. It identifies critical success factors (CSFs) within an industry and compares companies based on their performance in these areas. The CPM helps organizations understand their strengths, weaknesses, and competitive dynamics. 15. The IFE (Internal Factor Evaluation) and EFE (External Factor Evaluation) matrices Strategic management tools used to assess a company's internal strengths and 4  Asres A. weaknesses (IFE) and external opportunities and threats (EFE). Both matrices help organizations prioritize areas that need improvement and align strategies with internal capabilities and external conditions. 16. The Internal-External (IE) Matrix A strategic management tool used to evaluate and position an organization's business units or products based on internal strength (derived from the Internal Factor Evaluation, IFE Matrix) and external environment (derived from the External Factor Evaluation, EFE Matrix). It helps determine appropriate strategies for growth, stability, or retrenchment. 17. The Grand Strategy Matrix A strategic management tool that helps organizations identify appropriate strategies based on their market growth (external) and competitive position (internal). It divides strategies into four quadrants to guide firms toward growth, stability, or retrenchment depending on their market conditions and strengths. Key Steps in Strategy Analysis: 1. Understand the Mission and Vision: What is the organization aiming to achieve? 2. Evaluate Internal Resources and Capabilities: Use tools like SWOT and VRIO. 3. Assess the External Environment: Apply frameworks like PESTEL or Five Forces. 4. Set Strategic Goals: Define measurable and achievable objectives. 5. Develop and Test Strategic Options: Consider multiple scenarios and growth strategies. 6. Monitor and Adapt: Continuously evaluate progress and refine strategies. 5