Module 1 Strategic Thinking PDF

**SPECIAL TOPICS IN FINANCIAL MANAGEMENT** **MODULE 1** **STRATEGIC THINKING** **Introduction** Strategic thinking includes finding and developing a [strategic foresight](https://en.wikipedia.org/wiki/Strategic_foresight) capacity for an [organization](https://en.wikipedia.org/wiki/Organization)...

**SPECIAL TOPICS IN FINANCIAL MANAGEMENT** **MODULE 1** **STRATEGIC THINKING** **Introduction** Strategic thinking includes finding and developing a [strategic foresight](https://en.wikipedia.org/wiki/Strategic_foresight) capacity for an [organization](https://en.wikipedia.org/wiki/Organization), by exploring all possible organizational futures, and challenging conventional thinking to foster [decision making](https://en.wikipedia.org/wiki/Decision_making) today. Recent [strategic](https://en.wikipedia.org/wiki/Strategic) thought points ever more clearly towards the conclusion that the critical strategic question is not the conventional \"What?\", but \"Why?\" or \"How?\".  **Learning Outcome** At the end of the chapter, the students should be able to: 1. Define Strategic Thinking. 2. Enumerate the importance of Strategic Thinking. 3. Understand the components of Strategic Thinking. 4. Differentiate Strategic thinking vs. Strategic planning 5. Understand the Strategic thinking competencies 6. Discuss the ways to improve Strategic Thinking Skills 7. Define and discuss the 4 key qualities of Strategic Thinkers 8. Enumerate the 6 steps to make Strategic Plan really strategic. **Learning Content** 1. Definition of Strategic Thinking. 2. Importance of Strategic Thinking. 3. Components of Strategic Thinking. 4. Strategic thinking vs. Strategic planning 5. Strategic thinking competencies 6. Ways to Improve Your Strategic Thinking Skills 7. 4 Key Qualities of Strategic Thinkers 8. 6 Steps to Make Your Strategic Plan Really Strategic **Definition of Strategic Thinking** Strategic thinking is simply an intentional and rational thought process that focuses on the analysis of critical factors and variables that will influence the long-term success of a business, a team, or an individual. Strategic thinking includes careful and deliberate anticipation of threats and vulnerabilities to guard against and opportunities to pursue. Ultimately strategic thinking and analysis lead to a clear set of goals, plans, and new ideas required to survive and thrive in a competitive, changing environment. This sort of thinking must account for economic realities, market forces, and available resources. Strategic thinking requires research, analytical thinking, innovation, problem-solving skills, communication and leadership skills, and decisiveness. **Why is Strategic Thinking Important?** The competitive landscape can change quickly for any organization. New trends may emerge quickly and require you to take advantage of them or fall behind. By incorporating everyday strategic thinking into your work and life routines, you will become more skilled at anticipating, forecasting, and capitalizing on opportunities. On an individual level, thinking strategically allows you to make a greater contribution in your role, become more essential to your organization, and prove that you're ready to control greater resources. **What are the Components of Strategic Thinking?** As you create a strategic direction or plan, you'll analyze: - - - - - - As you discover obstacles during the planning process, you'll problem-solve by: - - - - - Strategic thinking requires agility and decisiveness in choosing a plan and sticking with it. However, you have to be aware of new, more promising opportunities. It is a balancing act between consistency and flexibility. You and your team will: 1. Make sure decisions are well-informed by thorough research 2. Choose objectives and accompanying metrics 3. Prioritize objectives 4. Follow a standard decision-making process 5. Build consensus, when necessary **Strategic thinking vs. strategic planning** The role of strategic thinking is \"to seek innovation and imagine new and very different futures that may lead the company to redefine its core strategies and even its industry\". Strategic planning\'s role is \"to realize and to support strategies developed through the strategic thinking process and to integrate these back into the business\". Strategic thinking differs from [strategic planning](https://en.wikipedia.org/wiki/Strategic_planning) along the following dimensions of [strategic management](https://en.wikipedia.org/wiki/Strategic_management): **Strategic Thinking** **Strategic Planning** ---------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Vision of the Future** Only the shape of the future can be predicted. A future that is predictable and specifiable in detail. **Strategic Formulation and Implementation** Formulation and implementation are interactive rather than sequential and discrete. The roles of formulation and implementation can be neatly divided. **Managerial Role in Strategy Making** Lower-level managers have a voice in strategy-making, as well as greater latitude to respond opportunistically to developing conditions. Senior executives obtain the needed information from lower-level managers, and then use it to create a plan which is, in turn, disseminated to managers for implementation. **Control** Relies on self-reference -- a sense of strategic intent and purpose embedded in the minds of managers throughout the organization that guides their choices on a daily basis in a process that is often difficult to measure and monitor from above. Asserts control through measurement systems, assuming that organizations can measure and monitor important variables both accurately and quickly. **Managerial Role in Implementation** All managers understand the larger system, the connection between their roles and the functioning of that system, as well as the interdependence between the various roles that comprise the system. Lower-level managers need only know his or her own role well and can be expected to defend only his or her own turf. **Strategy Making** Sees strategy and change as inescapably linked and assumes that finding new strategic options and implementing them successfully is harder and more important than evaluating them. The challenge of setting strategic direction is primarily analytic. **Process and Outcome** Sees the planning process itself as a critical value-adding element. Focus is on the creation of the plan as the ultimate objective. **Strategic thinking competencies** Systems perspective, refers to being able to understand implications of strategic actions. \"A strategic thinker has a mental model of the complete end-to-end system of value creation, his or her role within it, and an understanding of the competencies it contains.\" Intent focused which means more determined and less distractible than rivals in the marketplace. Crediting Hamel and Prahalad with popularizing the concept, Liedtka describes strategic intent as \"the focus that allows individuals within an organization to marshal and leverage their energy, to focus attention, to resist distraction, and to concentrate for as long as it takes to achieve a goal.\" Thinking in time means being able to hold past, present and future in mind at the same time to create better decision making and speed implementation. \"Strategy is not driven by future intent alone. It is the gap between today's reality and intent for the future that is critical.\" Scenario planning is a practical application for incorporating \"thinking in time\" into strategy making. Hypothesis driven, ensuring that both creative and critical thinking are incorporated into strategy making. This competency explicitly incorporates the scientific method into strategic thinking. Intelligent opportunism, which means being responsive to good opportunities. \"The dilemma involved in using a well-articulated strategy to channel organizational efforts effectively and efficiently must always be balanced against the risks of losing sight of alternative strategies better suited to a changing environment.\" **WAYS TO IMPROVE YOUR STRATEGIC THINKING SKILLS** There are a lot of reasons you might want to be a more strategic thinker---you might want to improve your business savvy, have more focus and direction in your personal life, or be a better chess player, for instance. Regardless of why you want to do it, improving your strategy involves thinking about the big picture around you---when you think strategically, you\'re able to visualize a variety of different outcomes, making it easier to plan for the future. This can take a little practice and you might have to push yourself out of your comfort zone, but if you stick with it, your strategic mindset will improve over time! 1. Block out time for thinking. Don\'t let a crowded schedule prevent you from thinking strategically. When things get hectic, it\'s easy to focus on small details instead of the bigger picture. However, being strategic means being able to take a step back from those little details. Clear out some time in your schedule where you can just sit and think without any distractions. For example, if you\'re in management, once a week you might block out 2 hours where you think about the big-picture strategy for your department, like the direction you want to take your team and how to proactively prepare for any problems that might arise. Try not to get bogged down in details during your strategy time. If you need to, write down things you\'ll need to figure out later so you can stay focused on your long-term plans. 2. Look for trends around you. Try to identify problems that keep reoccurring. As you\'re looking at the big picture, like your overall business operations or the scope of your personal life, look for issues that you have to keep addressing time and time again. Once you\'re able to identify those, it will be a lot easier to create a strategic plan for dealing with those obstacles. For instance, you might notice that when there\'s bad weather in a certain part of the country, your company has issues with shipping. In that case, you might implement a back-up plan, like designated alternate shipping routes or using a secondary shipping company. If you\'re playing a game like chess, you might notice that your opponent tends to favor a certain move when they feel threatened. Once you\'re aware of that, you may be able to pre-empt that move---like by blocking a certain piece, for example. 3. Question everything. Be curious and let go of assumptions. A big part of being strategic means challenging the status quo, so get in the habit of playing devil\'s advocate with yourself. Don\'t be afraid to question why things are done a certain way or how they could be done differently, and dig deeper if you feel like something is unclear or ambiguous. When you do that, you\'ll find it a lot easier to come up with different approaches for solving any problems that come up. For instance, if you notice that your office filing system tends to get really messy, question whether there\'s a different way you could organize the paperwork so it\'s more streamlined. If you\'re planning to start your own business, ask yourself questions like \"How could this go wrong?\" and \"What kind of problems should I prepare for?\" 4. Get other perspectives. Reach out to others for their opinions. Don\'t just surround yourself with people who are going to agree with you---build a team of people who are willing to tell you what they think. Then, when you\'re dealing with a problem, ask those people how they\'d approach the situation. When you do that, you\'re more likely to get a perspective you might not have considered on your own. This doesn\'t mean you need to let other people make decisions for you, but listening to different points of view can help you come up with a creative solution to whatever you\'re working on. For example, if you\'re working as a project manager and you run into a problem, you might ask everyone from your boss to the boots-on-the-ground workers how they would solve it. Then, you\'d evaluate all of those different perspectives to decide which suggestions have the most merit. Especially reach out to people who are regularly willing to challenge what you think, like someone who says, \"Have you thought about it this way?\" Those opposing viewpoints are crucial for strategic planning. 5. Anticipate problems before they happen. Think about a variety of different potential outcomes. If you\'re constantly reacting, it\'s hard to stay focused on your long-term goals. Instead, try to be proactive by anticipating changes that may be coming or issues that could arise. When you\'re thinking a few steps ahead, it will be a lot easier to plan out an effective strategy. For instance, in a business setting, you might stay informed about any advances in technology that could cause your services to become obsolete---then figure out how to incorporate those technological advances so you can use them to your advantage. It\'s impossible to foresee every situation that could arise, either in your personal or professional life. However, if you\'re generally prepared for different situations, it\'s usually easier to adapt when something unexpected does happen. 6. Focus on how to make things better. Don\'t just hone in on what\'s wrong. Instead, practice looking for what\'s going right. When you do that, it\'s easier to look for what you can do to build on the good things that are happening, which will sometimes help eliminate problems before they begin. If you do notice a problem, be the person who looks for a solution---not just the person who points out the issue. For example, if your team is regularly coming in behind deadline, you might strategize how to get through your workload more efficiently so it\'s easier to stay on schedule. 7. Set clear goals and evaluate them periodically.Be strategic by focusing on long-term targets. Use the acronym SMART to make sure your goals are reasonable---goals should be Specific, Measurable, Achievable, Realistic, and Timely.^ ^In addition, create an action plan with specific steps for how you\'re going to meet those goals. For example, if your marketing strategy involves improving your social media presence, you might create an action plan that includes things like identifying your target audience, optimizing all of your pages, sticking to a regular posting schedule, and creating a consistent \"voice\" for your brand. Regularly monitor your progress to make sure the plan is still working for you. Also, be flexible when you\'re updating your plans---that\'s an important part of making sure your strategy stays relevant! 8. Stay focused on your most important goals. Don\'t let small crises distract you. When you\'re a great strategist, you understand that getting tangled up in smaller problems can derail you from your endgame. When something comes up that you need to deal with, ask yourself what solution lines up best with your long-term goals. That can make it easier to decide what to do, without spending a lot of times on things that aren\'t that important. 9. Give yourself time to make important decisions---patience is an important part of strategic thinking. For instance, if you have a goal to pay off your credit cards in a year, and your dishwasher breaks down, you might decide it\'s more strategic to wash your dishes by hand until you get your credit cards paid off, then save until you can afford to pay cash for a new dishwasher. If you\'re running a company and your goal is to grow your client base, you might find that it\'s a good investment to purchase new manufacturing equipment, especially if slow production times are affecting customer satisfaction. 10. Work on the weakest part of your plan. Focus your energy on where you need the most improvement. Ask yourself if there\'s an area where you\'re especially vulnerable, then find ways to shore that up. In chess, this is known as \"improving your worst piece\"---but it can apply to anything from managing your personal life to running a huge corporation. Once you\'ve taken care of that issue, find the new \"worst piece\" and work on that. For example, if you want your home to be neater, you might start by identifying the spot that tends to get messy the fastest. Then, create an organizational system for that area. Once that\'s under control, move on to the next place that clutter tends to gather. 11. Balance logic and creativity. Use both the left and right sides of your brain. Being strategic means sometimes you have to come up with innovative solutions to problems. However, you also have to be realistic and logical about what will and won\'t work. Try to find a balance between the two that works for you, rather than leaning too heavily on one side or the other. For example, when you\'re developing a new product, you typically start by coming up with a creative solution to a problem your consumers are facing. However, you also have to be really logical about things like cost-effectiveness, customer acquisition costs, and manufacturing limitations. Don\'t be afraid to take risks as you\'re building out your strategy! 12. Learn from your experiences. Reflect; don\'t just react. Sometimes when we\'re overwhelmed, it\'s easy just to move from one experience to another without taking time to reflect on what\'s happening. However, if you want to have better strategic thinking skills, it\'s important to look back on your experiences to understand what happened, why it happened, and what you can do to prevent it next time. If you spent a lot of time developing a new product that didn\'t sell well, for instance, you might realize that you need to put more effort into getting feedback early in the planning process. That way, you\'ll only put resources into something that generates a lot of interest. Learning from your mistakes is an especially important part of becoming more strategic, because it helps you avoid those stumbling blocks in the future. 13. Play more games. Spark your strategic thinking with sports, video games, and chess. If you want a way to practice your strategic thinking, try taking it a little less seriously---and turn to some of your favorite games! Chess is well-known for being an excellent way to boost your ability to think strategically.^ ^However, there are other fun ways that may help, as well: Video games that involve real-time strategy can actually help you learn to think more quickly on your feet, which can be an important part of adapting strategy in the real world. In addition to a ton of other physical and mental benefits, playing sports can also help you boost your strategic thinking skills. **4 Key qualities of strategic thinkers** Bring to your mind a professional leader you admire. Have you chosen them because of their innovation, intelligence or ability to engage audiences? Or maybe you like their capacity to critique process and procedure while still being receptive to feedback and change? If your model leader possesses any of the above qualities, they're a strategic thinker. Here are four qualities that all strategic thinkers possess, and continue to work on throughout their lives: 1. **They're always learning**\ Strategic thinking skills are developed by committing to constant learning and self-improvement. Whether it's learning from their own experiences, the experiences of others, books, presentations, networks, conferences or junior colleagues, strategic thinkers don't dismiss any potential sources of education.\   2. **They always seek advice from others**\ In the spirit of being able to prepare for the future and make constant improvements, strategic thinkers welcome feedback and advice from others. They test ideas and concepts and ensure that criticisms are examined and incorporated where relevant. This process makes their plans and strategies as robust and steadfast as possible.\   3. **They're not afraid to take risks**\ Great strategic thinkers understand that professional excellence doesn't always emerge from a cookie-cutter approach. After careful consideration, they take risks on new ideas, innovative solutions and unique pitches, prepared for both success and failure, and always willing to learn from their mistakes. \   4. **They never forget organizational purpose**\ Whether a business builds intuitive websites for clients or sells diverse share portfolios, strategic thinkers will never neglect their purpose or people. If the strategic thinking and planning doesn't revolve around these two key elements, it has failed to be strategic at all.  **6 Steps to Make Your Strategic Plan Really Strategic** **STEP ONE** is to **recognize your dependencies**, i.e. your [key stakeholders](https://hbr.org/2014/03/five-questions-to-identify-key-stakeholders). You may think that this will be easy. And in a small business, like a convenience store, it initially is: customers, employees, suppliers, and owners. But then you become aware that some of the employees are also owners, and the complexity grows. The trick is to identify stakeholder roles. The same group of stakeholders can occupy more than one role. Take the example of a dairy cooperative I worked with recently. It was a national distributor of milk and other dairy products and in it, farmers occupied two roles. We described these as: farmers-as-shareholders and farmers-as-suppliers. Its other key stakeholders were distributors; customers-retail; customers-industrial/food service; consumers; and employees. Once you get the knotty key-stakeholder problem sorted out you can move on --- but not too fast. An essential **SECOND STEP**, and one that I've been guilty of not stressing enough with clients, comes with the word "target." It's vitally important to **identify your "target customer"** before moving forward. Take, for example, the international accounting firm KPMG. Its target customers aren't mums and dads lodging their annual tax returns, or small businesses that need help with their accounts. That work falls on the shoulders of the suburban accountant. Nor is KPMG's target mid-size firms with limited budgets. That's for so called "second-tier" accounting firms. No, KPMG targets large corporates and big government. The **THIRD STEP** requires you to work out **what your organization wants from each key stakeholder group** for your organization to prosper. For some managers, this seems initially like putting the cart before the horse. The reason? They're so used to thinking operationally rather than strategically that putting "self" first seems like heresy. Nowhere is this more apparent than with the stakeholder "employees." Take the case of a recent client of mine, an architectural firm. The HR team and senior management would bend over backwards to identify what would satisfy staff. But they placed little attention on, and certainly failed to measure, the return volley. That is, what the organization wanted from employees. Once it adopted the six-step method, these outcomes were identified as "reducing employee turnover and increasing productivity and innovation." Metrics were developed to monitor these, and targets were set before moving on. The **FOURTH STEP** is to identify **what these stakeholder groups want from you**. These are the key decision-making criteria that stakeholders use when interacting with your business. For example, these might include the [factors](https://hbr.org/2014/05/dialing-up-the-volume-on-strategic-innovation) influencing the decision to purchase from you (customers), work for you (employees), supply to you (suppliers) or invest in you (shareholders). It's essential that you know how each stakeholder group thinks about these --- that you focus on their point of view, not your own. This can come from a variety of sources including: in-depth interviews of stakeholders, listening to stakeholder stories about their experience with you and the competition, feedback via your complaint and suggestion systems, focus groups and even casual conversations with stakeholders. It can even involve immersing yourself in the stakeholder experience by going through it, e.g. the senior executives of an airline might travel at the back of the plane  to get a feel for what economy passengers experience. **Strategy design**, your **FIFTH STEP**, involves deciding what your organization's positions will be on the identified [strategic factors](https://hbr.org/2014/05/dialing-up-the-volume-on-strategic-innovation) for each key stakeholder group. This is shaped by the objectives you've set for your organization and the knowledge you've gleaned about your stakeholders' current and future needs on strategic factors. This is where "focus" again delivers in spades. I've assisted a rural bank which decided that its target customer was "commercial family farms." This ruled out large corporate farms and hobby farms. It then built strategy based on these customers' opinions. It went further to co-create with farmers its positions on product range, customer service, and price to drive revenue and profitability. [Stakeholders can be great strategists.](https://hbr.org/2014/09/customers-are-better-strategists-than-managers) Tap them in designing strategy. The **SIXTH STEP** is **continuous improvement**. Recognize that no matter what you decide, there is no certainty in the result once you embark on implementation via an action plan and [scorecard](http://www.strategicfactors.com/resources/Ditching%20the%20Balanced%20Scorecard%20-%20Focused%20Scorecard%20-%20Graham%20Kenny.pdf). You can't be sure, for instance, in the case of the manufacturer of specialized air conditioners, that ramping up technical support pre- and post-sale will drive more revenue. [Be prepared to adjust](https://hbr.org/2016/06/strategic-plans-are-less-important-than-strategic-planning). View your strategic as being locked in an intimate tango with your key stakeholders. This dynamic perspective encourages openness, innovation and a preparedness to change. **Learning Task 1:** Read the following resource materials. (Module or E-resources) 1. 2\. 3. https://online.hbs.edu/blog/post/how-to-develop-strategic-thinking-skills 4. 5\. https://alison.com/course/strategic-planningskills **Assessment Task:** 1. Define Strategic Thinking. 2. Enumerate the importance of Strategic Thinking. 3. Understand the components of Strategic Thinking. 4. Differentiate Strategic thinking vs. Strategic planning 5. Understand the Strategic thinking competencies 6. Discuss the ways to improve Strategic Thinking Skills 7. Define and discuss the 4 key qualities of Strategic Thinkers 8. Enumerate the 6 steps to make Strategic Plan really **References;** 1. [\"What is Strategic Thinking? by Rich Horwath\"](http://www.sculpturaconsulting.com/Articles_Samples/What_is_Strategic_Thinking.pdf) (PDF). Retrieved 10 August 2018. [2.](https://en.wikipedia.org/wiki/Strategic_thinking#cite_ref-ST-B-02_3-0) [\"Strategic Thinking\"](http://www.cfar.com/Documents/strathink.pdf) (PDF). Center for Applied Research. Retrieved 10 August 2019. [3.](https://en.wikipedia.org/wiki/Strategic_thinking#cite_ref-ST-B-03_4-0)[\"Strategic Thinking : The power of collaboration\"](http://ww3.harvardbusiness.org/corporate/demos/hmm10/strategic_thinking/the_power_of_collaboration.html). harvardbusiness.org. Retrieved 10 August 2019. [4.](https://en.wikipedia.org/wiki/Strategic_thinking#cite_ref-ST-B-04_5-0) [\"Strategic Thinking : Is Leadership the missing link An Exploratory Study\"](http://www.iitk.ac.in/infocell/announce/convention/papers/Strategy-01-Manu%20Amitabh%20final.pdf) (PDF). Retrieved 10 August 2019. by Manu Amitabh 5\. [\"Strategic Thinking : A discussion paper\"](http://www.csun.edu/bus302/Course/Materials/Cases/strategic.thinking.pdf) (PDF). csun.edu. Retrieved 10 August2019. [6.](https://en.wikipedia.org/wiki/Strategic_thinking#cite_ref-ST-RBK-17_10-0) Henry Mintzberg (2018), "[The Fall and Rise of Strategic Planning](http://hbr.org/1994/01/the-fall-and-rise-of-strategic-planning/ar/1)", Harvard Business Review [7.](https://en.wikipedia.org/wiki/Strategic_thinking#cite_ref-ST-RBK-03_12-0) Ingrid Bonn, (2020), "[Developing Strategic Thinking as a Core Competency](http://www.emeraldinsight.com/journals.htm?articleid=865194)", Management Decision 8.[https://en.wikipedia.org/wiki/Strategic\_thinking\#](https://en.wikipedia.org/wiki/Strategic_thinking) 9\. 10. https://www.effectivegovernance.com.au/page/knowledge-centre/news-articles/what-is-strategic-thinking MODULE 2 STRATEGIC ANALYSIS Introduction Strategic analysis is a process that involves researching an organization's business environment within which it operates. Strategic analysis is essential to formulate strategic planning for decision making and smooth working of that organization. With the help of strategic planning, the objective or goals that are set by the organization can be fulfilled. In a constant strive to improve, organizations must periodically conduct a strategic analysis which will, In turn, help them determine what areas need improvement and areas that are already doing well. For an organization to function efficiently, it is important to think about how positive changes need to be implemented. Learning Outcome At the end of the chapter, the students should be able to: 1. Define what is Strategic Analysis. 2. Discuss the Importance of Strategic analysis 3. Enumerate and discuss the types of Strategic Analysis 4. Explain the applications of Strategic Analysis 5. Explain the steps to Perform a Strategic Analysis 6. Explain the advantage and disadvantages of Strategic Analysis 7. Discuss the different Levels of Strategic Analysis 8. Discuss the different Types of Strategic Analysis Tools Learning Content 1. Definition of Strategic Analysis 2. Importance of Strategic analysis 3. Types of Strategic Analysis 4. Applications of Strategic Analysis 5. Steps to Perform a Strategic Analysis 6. Advantage and disadvantages of Strategic Analysis 7. Different Levels of Strategic Analysis 8. Different Types of Strategic Analysis Tools Definition of Strategic Analysis Strategic analysis refers to the process of conducting research on a company and its operating environment to formulate a strategy. The definition of strategic analysis may differ from an academic or business perspective, but the process involves several common factors: - Identifying and evaluating data relevant to the company's strategy - Defining the internal and external environments to be analyzed - Using several analytic methods such as Porter's five forces analysis, SWOT analysis, and value chain analysis Importance of Strategic analysis Strategic analysis is essential if a company has a goal and a mission for themselves. All leading organization who are well known for their achievements have years of strategic planning being implemented at various stages. Strategic planning is a long-term task involving continuous and systematic planning and resource investment. The main question that a company should consider when performing a strategic analysis is: - How is the market constituted? - How are the active clients in this sector? While conducting strategic analysis, organizations must know their competitors and thus be able to define a strategy that will help them an unbeatable player in that market. One of the most important functions of strategic planning is to predict future events and deduce alternative strategies if a certain plan doesn't work out as expected. Types of Strategic Analysis I.Internal strategic analysis: As the name suggests, through this analysis organizations look inwards or within the organization and identify the positive and negative points, and establish the set of resources that can be used to improve the company's image within the market. Internal analysis starts from evaluating the performance of The organization. This includes evaluating the potential of an organization and its capacity to grow. The SWOT Matrix is a strategic planning tool designed to evaluate the Strengths, Weaknesses, Opportunities, and Threats associated with a project. The SWOT framework makes it easier for you to clearly identify your objectives, and then to consider the factors that might help or hinder your progress toward those objectives. Let us further break down these attributes and understand how an organization can conduct a complete strategic analysis to be able to plan and perform better with each passing year. 1. Strengths of a company: There are several attributes within the company that are positive, that you can control in order to obtain better results, they are your strengths, which makes you stand out from others. Surely there are certain resources or strategies that have led to your organization's process year on year. Knowing these resources or strategies are also considered as strengths. Knowing this type of information is very important because these are the elements that give you an advantage over your competition. 2. Business weakness: It is practically impossible for an organization or a company to have only strengths and not have weaknesses. Therefore, there are certain characteristics of an organization that they need to be improved in order to be able to perform better and compete in the market. These are called business weaknesses. Most of the factors are foreseeable and an organization needs to identify them well in advance and approach the problems with a corrective measure. 3. Threats to an organization: There are going to negative factors that will affect the growth of the organization and these factors can be analyzed too. These factors need to detected and a risk management strategy needs to be put in place so that threats like stronger brand value of the competitors, better relationship of competitors with retailers etc. don't have an adverse effect on the company's growth. Also, threats like multiple players in the market with the same products, downturn in economy, better advertising of the same product by competitors are some threats that have to be dealt with carefully so that competitors don't take advantage of the situation. 4. Opportunities for the company: Detect the opportunities you have to grow. Knowing the path organizations must follow is a great step towards success. Take advantage of all those external factors that are positive for the organization. Identify all the opportunities and take advantage of them. II\. External strategic analysis: Once the organization has successfully completed its internal analysis, the organization needs to know about external factors that can be a hindrance in their growth. To do so, they need to know how the market functions and how consumers react or behave to certain products or services. Measuring customer satisfaction is a common external analysis method. PESTLE analysis (Political, Economic, Social, Technological, Legal and Environmental) describes a framework of macro-environmental factors used in the environmental scanning component of external strategic analysis. The model has been extended by adding Ethics and Demographic factors. It is a part of the external analysis when conducting a strategic analysis or doing market research and gives an overview of the different macroenvironmental factors that the organization has to take into consideration. By using PESTLE analysis one can: - Find out the key issues beyond the organization's control, like changes in political scenario changing rules that can be implemented at any point in time. - Identify the impact of each issue. - See how important these issues are to the organization. - Rate the likelihood of its occurrence. - Briefly consider the implications if the issue did occur. There are three steps for the PESTLE analysis which are: 1. Identification of the changes in the big picture by the application of mnemonic analysis 2. Identification of the threats or opportunities due to the changes 3. Inclusion of the strategies to lessen the chances of threats and take full benefits of the opportunities. During PESTLE analysis, the following questions need to be asked for each of the external elements. A. Political - How is the stability of the government? - Is the election due in the recent months? - Who are the contenders for the political positions? - Are there any changes in the legislation or taxes? - Is there any probability of any political factors that can cause a big change? B. Socio-Cultural - What is the age profile of the growing population? - What is the pattern of employment? - Is there any shift in the generational attitude? - Can religious and lifestyle choices impact the selling of the product? C. Legal - Are there any major international changes in the law? - Is the consumer protection law changed or is it about to change? - Is there any specific regulatory law for the industry? D. Economic - Is the economy of the country growing, declining or stagnant mode? - Are the exchange rates of any particular currency volatile? - Is there any rise or fall in disposable income? - What is the current employment rate of the country? D. Technological - Is there any introduction of the new technology that the competitors have access to? - Is any technological change causing the social changes? - Is there any communication system available? E. Environmental - Can environmental issues impact the products? - Can waste management and pollution impact the organization? - Do any global factors need immediate attention? - Are the employees morally low or down? Applications of Strategic Analysis 1.Market Sizing Analysis -- Market sizing is critical for any company that wishes to either enter a market, launch a new product or service. Your team needs to specialize in analyzing market size and market dynamics. A multi approach market sizing methodology helps to accurately analyze a market. Our experience of suggests that small markets are less likely to be able to support a high volume of goods and large markets could bring in more competition. 2.Product Portfolio Analysis -- Every product firm realizes that a product has to go through a series of changes throughout its life cycle from introductory to maturity and eventually decline. This is where Product Portfolio Analysis becomes very critical for an organization to assess where their products stand in terms of competition, consumer perception, market share, SWOT analysis, future consumer behavior etc., to identify star products that can sustain growth over a longer period of time. 3.Forecasting Analysis -- Organizations realize that foreseeing future is important to measure current businesses growth over a period of time and it is also critical for assessing potential business opportunities and re-evaluate previous strategy. A business requires team which specializes in building forecasting models using forecasting techniques like Time Series Analysis, Simple Moving Averages, Weighted Moving Averages, Regression, Econometrics and Drivers & Inhibitors model. We can apply these forecasting techniques for assessing Consumer Spending Behavior Analysis (Credit card firm) Market Size Forecasting and Product Price Fluctuation etc., for clients. If appropriate data can be collected and identified, then it can provide you with better performance measurements and perform in depth analysis. 4.Brand Perception -- branding and consumer perception of a brand has become key to success of any product/service in any market. Teams need to understand, place, perceive and analyze brand from the point of view of consumers. Conduct brand perception studies for media houses and educational institutes. 5.Market Assessment -- In today's cut-throat environment, where complete market assessment and product positioning are the most important factors for a company to differentiate its products from those of competitors. Companies should identify market segments, industry trends, consumer preferences and position their products accordingly. 6.Business Partner Analysis -- With companies going global or trying to cut down on costs, it is becoming increasingly important for the sales & marketing, talent acquisition, sourcing, supply chain & logistics division of companies to identify the right business partners and potential vendors. Various firms have built a strong partner identification analysis framework that studies complete dynamics of potential business partner. They study the partnering strategies of top players, best practices, potential partner's impact and revenue generation capabilities. 7.Market Player Analysis -- With the help of the business research division, create detailed profiles of key players/competitors that may include management profiles, product information, market share, key infrastructure initiatives, partnerships, M&A activities, research focus, etc. 8.Competitive Analysis -- In today's competitive business environment, it is becoming mandatory for companies to know what their competitors are doing, what are the research activities being undertaken, what the image the company has, etc. A business prepared to deal with external threat, strategic issues, internal weaknesses and derive benefit of external opportunities, excels in business world. Steps to Perform a Strategic Analysis The strategic analysis can be performed in an enterprise in the following different ways. 1.Analysis of the environment of the current strategies: From the very first, an organization needs to finish up the environmental analysis of the ongoing strategies. Operational affectivities and inefficiencies, financial constraints, the morale of the employee, etc are included in the internal environment analysis. Political trends, changes in consumer opinions and economic shifts are some of the factors to consider while analyzing the external environment. 2.Determination of the efficiencies of the Current Strategies: The main motive of strategic analysis is to determine the efficiency of the existing strategies that an organization is following in its prevailing environment of the business. The strategic analysis helps to find all the answers for difficult questions like Is these strategies good or failing? Can the company meet the set goals? Or does the strategy the organization is going to implement will align with the values, vision, and mission of the company? 3.Formulating the Plans: If the answer to any of the above questions is still unknown or unsure, then the company undergoes a planning stage where the strategic analysts propose different alternatives. Lower production costs, leaner operations, changes in the structure of the capital and management of the supply chains are some of the potential alternatives that an organization can choose from. 4.Recommendation and Implementation of the most Feasible plan: Lastly, after all the assessment of the available strategies, the analysts recommend the most quantitatively profitable and viable strategy to the enterprise. After the recommendation and implementation of the plan, it should be repeatedly re-assessed. Advantages of Strategic Analysis There are a few of the benefits of strategic advantages which are discussed as follows: 1. The strategic analysis offers clarity of the positive attributes within an organization that are totally under control. 2. It assists in identifying both external as well as internal factors that help a business to take a lead over its competitors 3. It gives a clear idea about all the components that add competitive advantage and value to the business. Disadvantages of Strategic Analysis However, along with numerous benefits, strategic analysis has some weaknesses also. They are as follows. 1. Strategic analysis detects all the factors or creates different ideas, but does not clarify which aspect needs more attention or which idea is the best. 2. Sometimes a large amount of time is spent on problem-solving, which left us with no or little time for the discovery of new products affecting the level of the service of a business. Different Levels of Strategic Analysis There are three different levels of strategic analysis based on scopes. They are: 1. Functional Level of Strategic Analysis: Functional level strategic analysis is the lowest level of decision making. This analysis focuses on the activities within the different segments and aims for the overall improvement of the organization. The plans are meant for particular groups or functions. 2. Business level Strategic Analysis: In the middle is the business level of strategic analysis. This business-level decision mainly focuses on the positions of the market to help the organization to gain a competitive advantage in its field. 3. Corporate Level of Strategic Analysis: This is the highest level of decision making in strategic analysis. Corporate level strategic analysis is based on the entire function of an organization and thus affects the profitability of the company in future times. Different Types of Strategic Analysis Tools There are different techniques to determine the strategic analysis of an organization. We have already discussed the SWOT and the PESTLE analysis in the different types of strategic analysis section. Now let us have a sneak peek into the other techniques as well. 1. Gap Analysis When starting a strategic analysis process, it would be very wrong to throw away the old strategies in which a lot of people have already invested their effort and time into communicating, formulating and implementing a plan. The missing items in the old strategy should be detected and validated. This process of identification is known as Gap Analysis. It is an analysis of existing strategies to find any gap that needs to be immediately addressed. To make sure that any item is not left behind, the strategic analysts employ a benchmark to compare to the items of the competitors or to follow a previously tried, established and tested general list. The Gap analysis ensures that the entire strategic activities are covered to offer a good reference throughout the analyzing process. It also helps to determine which analysis technique should be used among the numerous ones. 2. Porter's Five Forces Porter's Five Forces Analysis is based on microenvironmental factors. These factors are closely related to the company that can affect the capacity to serve the customers to make a profit. The Five Forces are: A. Buyers: Buyers always want to buy more and pay less for a product. The price competition is very high in the mobile industry. Buyers simply want the best smartphone with all the updated features and that too at the lowest price. b\. Suppliers: Suppliers want to be paid more and deliver less. They always insist on high price value or for the terms that are more favorable for them. The demand increases in he/she are the only supplier in the vicinity. c\. New Entrants: New entrants in the industry often cause tension to different organizations. Most of the time a new company provides all the same services or products but at a much lower cost. This enforces the existing enterprises in the business to expand more money to keep up the old customer base. D. Substitutes: This can be a cause of concern for an organization when someone else comes with a substituting option for the same product or services. e\. Existing competitors: Existing competitors are still a big threat to an organization that can reduce profitability in the long run. 3. Boston Matrix Boston Matrix is the other name of service and product portfolio. This tool for strategic analysis needs to analyze the product or service of an organization and determine if it is a sick dog, a cash cow, or a flying star. After proper consideration through market share and growth, the review of a particular product or service can be determined by implementing this technique. Learning Task 1: Read the following resource materials. (Module or E-resources) 1.https://www.effectivegovernance.com.au/page/knowledge-centre/news-articles/what-is-strategic-analysis 2.https://cmoe.com/glossary/strategic-analysis/ 3.https://online.hbs.edu/blog/post/how-to-develop-strategic-analysis-skills Learning Task 2: Read and watch the following resource materials. (Module or E-resources) 1.https://www.forbes.com/sites/joefolkman/2021/02/05/strategic-analysis/ 2.https://a