STRATEGIC

MANAGEMENT
Assignment

Abstract
Following document contains assignment on some strategic management topics
i.e. strategic groups, strategic types, hyper competition, competitive
intelligence, strategic audit

By: Bilal Ahmed

To: Sir. Hameed Asghar Sana
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Strategic Groups
Strategic groups can be defined as a group of companies within a particular industry that follows a
similar strategy or similar business model.

Strategic groups:
 Have similar characteristics 
 Have similar market shares
 Respond to market trends or competition (threats and opportunities) in similar ways
 Offer similar customer service 
The term “Strategic group” is introduced by Micheal S. Hunt, a Harvard professor in 1972, in his
doctoral thesis report. While studying the appliances industry, he learned that the companies that are
part of subgroups have high competition among them.
Later the concept of “Strategic groups” was developed by Micheal Porter, and he applied the idea of
the strategic group in his strategic analysis. He used the concept of “strategic group” to define the
term mobility barrier. The notion of mobility barrier is applied to the company that becomes part of a
specific strategic group.
The strategic group causes the industry to have more innovation, lower profitability, decreased prices,
and better quality of products and services. The strategic groups are identified based on the similar
characteristics followed by the companies.

Characteristics
The following are the characteristics based on which the strategic group of the industry is formed:

1. The pricing policy

The pricing policy is one of the main features based on which the strategic groups are formed. For
example, the companies that sell products at low prices are direct competitors to one another. The
giant retailers like Walmart and Target are direct competitors to each other as both follow the low
pricing policy.

2. The extent of products or services diversity

The companies that provide different products and services are part of one strategic group. For
example, ITC and Hindustan Unilever companies are part of one strategic group as both companies
offer different products and services.

3. The extent of branding

Companies whose products and services are recognized by people based on their brand’s name and
not based on the quality of the products or services are part of one strategic group. For example,
cosmetic brand companies like Lakme, Bobby Brown, and Loreal companies are part of one strategic
group

4. Distribution Channel used

Companies that use similar distribution channels are part of one strategic group. Let us take the
example of the aviation industry. In the aviation industry, there are different segments, such as luxury
class, business class, and economy class. The aviation companies that provide luxury class services
are part of one strategic group. Similarly, the aviation companies that offer business-class services are
part of one strategic group.

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Competition; The Key Component

“In competitive markets, firms need to develop competitive positioning strategies carefully relative to
their competitors in order to achieve enduring competitive success.” (Michael E. Porter)
Competition is often regarded as a threat, but at the same time, it plays a significant role in the
development of a company. Competition encourages a business to find unique ways to attract
customers to their products and services away from that of their rivals, and in doing so they are able to
successfully achieve a competitive advantage.
To achieve enduring competitive success in an industry, a company must thoroughly understand its
competitive landscape and develop competitive positioning strategies. One effective tool used to gain
insight into direct competitors and analyze their market positions is the strategic group analysis. The
analysis provides the data indispensable in the design of the marketing strategy of a company.

Specimen
A simple example of a strategic group would be the fast-food restaurant chains in the foodservice
industry. Other strategic groups in this industry include fine-dining restaurants, cafes, and family
restaurants among many others. Fast-food chains differentiate themselves from these other strategic
groups in terms of their relatively low-prices, quick-service, variety of food, and more.

Strategic Group Analysis

Strategic group analysis is used to examine the competitive environment and the rivalry among
competitors within an industry. 

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It helps;
 Identify the strategic direction of the direct rivals in the industry. This will in turn help shape
the strategic moves of your own organization. 
 Identify the strategies used by companies in other strategic groups. In certain difficult
situations, your organization can use these alternative paths to success as solutions.
 Discover untapped opportunities in the industry by revealing the gaps (i.e., disclose areas
where there is limited or no competition)
Strategic Group Analysis (SGA) aims to identify organizations with similar strategic characteristics,
following similar strategies or competing on similar bases.
Such groups can usually be identified using two or perhaps three sets of characteristics as the bases of
competition.
Examples of the SGA:
 Extent of product (or service) diversity.
 Extent of geographic coverage.
 Number of market segments served.
 Distribution channels used.
 Extent of branding.
 Marketing effort.
 Degree of vertical integration.
 Product (or service) quality.
 Pricing policy.

Use of Strategic Group Analysis This analysis is useful in several ways:

 Helps identify who the most direct competitors are and on what basis they compete.
 Raises the question of how likely or possible it is for another organization to move from one
strategic group to another.
 Strategic Group mapping might also be used to identify opportunities.
 Can also help identify strategic problems.

Mapping Strategic Groups

The strategy group map is used as the primary tool in the analysis of strategic groups. It helps
visualize and analyze the competitive positions of industry rivals based on variables (common
characteristics) relevant to their strategic significance.

Identify your main competitors

This, you may already be aware of. However, it’s beneficial to analyze them even more thoroughly
before creating the map. Look into the services or products they offer, the impact they are making on
the market, their future strategies, objectives, and their strengths and weaknesses.
Focus on the top direct rivals – at least five of them. As you gather insight, you can record them using
a competitor profile, which you can refer to in future planning initiatives.

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Identify the strategic characteristics that differentiate the companies 

Organizations that belong in the same strategic group can be differentiated based on certain
characteristics. These include aspects such as; 
 Product quality and features
 Extent of product/ service diversity 
 Number of market segments served
 Distribution channels 
 Brand image 
 Degree of vertical integration
 Price policy 
 Company size
 Cost position 
 Capacity utilization

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Plot the companies on the graph

Draw a two-variable map with the axes represented by two of the least correlated variables that you
identified in the earlier step (i.e., geographic coverage and price). Assign each company a position on
the map. Those that are placed closest to each other belong to one strategic group. The size of the
circle can be adjusted to highlight the market share held by each of these strategic groups.

Using pairs of different variables, you can repeat the exercise until you discover a pattern that groups
companies together frequently. This exercise will reveal that either the industry is homogenous and
the companies compete on the same basis, or heterogeneous where each company forms its own
strategic group.

Interpret the map and identify future competitive strategies

Based on your analysis, you now know who your direct rivals are and where they stand. It will help
you understand your own strategy in relation to strategic group interactions. 
As you interpret the map, you’ll be able to identify attractive as well as unattractive positions in the
industry that you can consider moving to gain a competitive advantage. 

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Strategic types
The Miles and Snow’s strategy typology is an important tool to analyze the types of strategy based
upon contingent factors inside and outside the firm. Consequently, they posit strategy as a function of
three core organizational problems – entrepreneurship, operational, and administration. Let us take a
look at this typology to understand it better.

The basic managerial problems

There are three kinds of basic managerial problems. Miles and Snow discussed these problems within
their framework. There are essentially three types of problems. These are enlisted below:

 Entrepreneurial problems
 Engineering problems
 Administrative problem

Entrepreneurial problems
An entrepreneurial problem is the problem of a business venture. Businesses have the option of either
using the current product mix. Alternatively, they could also seek out new product-market. Firms at
one end of the entrepreneurial scheme can be seen as extremely passive in their new product
development. On the other hand, forms that are extremely entrepreneurial will take extreme risks and
develop cutting-edge products. It may appear to be fancy to go for the ‘next big idea’ and stay
entrepreneurial. However, it is not a great idea all the time. And really, firms need to balance out both
these approaches.

Engineering problems
The engineering problem deals with how to achieve the strategy. In other words, it is the successor to
the entrepreneurial problem. We can also say that engineering problem tries to find ways to solve the
entrepreneurial problem. Researchers have said that the engineering problem focuses on ways to
utilize resources, Process improvement, and expertise development. It takes a lot of deliberate
planning and proactive measure to develop roadmaps for new technologies like AI. It could also
include decisions like incremental innovation versus radical innovation.

Administrative problems
Consequently, we come to the administrative problems. Administrative problems talk about the
execution of the strategies. Administrative problems present the challenges due to the structures and
processes inside the organization. In order to achieve the organizational goals, these need to be
maneuvered. They present a challenging task in front of the managers. The solutions need to cater to
the previous decisions of the entrepreneurial problem as well as the engineering problem.

Miles and Snow’s Strategy Typology

Miles and Snow’s strategy typology proposed that firms may employ different strategies but they can
be better understood through a classification. They proposed that there are four different types of
strategies. This classification helps us to understand the strategic development process. On one hand,
we can explain why a firm took a particular stance based upon its circumstances. On the other hand,
we can predict or prescribe how a firm should behave given a certain set of circumstances.
Miles and Snow identify four different strategic positions:
 Defender
 Prospector

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 Analyzer
 Reactor
Each strategic position results in different behaviour in order to maximise the potential opportunity in
a marketplace. Decisions you make on investment, structure, org design, processes, approach, all
depend on the strategic position you currently are in and the one you wish to be in for the future.

What is the Prospector strategy?

Prospector companies are seen to be first movers in markets with their growth driven by innovation
and thought-leadership. Apple is a commonly cited example of what would be considered a company
with a Prospector strategy, with launches such as the iPhone and Apple Watch.
Prospectors have a challenge maintaining the position as it requires constant R&D and successful
product or service launches. They’ll be more likely to consider options that are higher risk, using tools
like the Ansoff Matrix, or looking at Diversification as a strategic implementation option.
Advantages of the Prospector Strategy:
 Seen as market leader visa differentiation
 Customer perception often high quality
 Can command high price points
Disadvantages of the Prospector Strategy:
 Expensive and difficult to maintain this position

What is the Defender strategy?

Companies with a Defender strategy are not looking to change their position in the market, instead
they wish to defend and maintain their position whilst improving their margins.

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Although considered a good position for successful companies, if the Defender strategy is maintained
for too long the risk increases that a substitute product or direct competitor will take market share.
Advantages of the Defender Strategy:
 Company can focus on efficiency and margins
 Little investment needed in R&D to maintain position
Disadvantages of the Defender Strategy:
 Risk of falling behind increases
 Risk of missing new opportunities is high

What is the Analyzer strategy?

Analyzer companies attempt to take the best parts of both Defender and Prospector. They are
defending their current market position, whilst looking for new opportunities and innovating. Many
companies can be classified as this position, ensuring their current revenues are well defended whilst
looking to take advantage of new opportunities.
If the balance is done well, this is a really strong strategy. The risk being that it’s hard to maintain that
balance, as competitors focused on either Defender or Prospector may become specialists in those
activities and thus move ahead from the Analyzer.
Advantages of the Analyzer Strategy:
 “Best of both worlds” approach
 Helpful when moving from Defender to Prospector
Disadvantages of the Analyzer Strategy:
 Can be hard to get the balance and focus right
 Competitors may pull ahead if innovation or defence under resourced

What is the Reactor strategy?

Reactor companies focus on their external environment and change their strategy depending on the
threats or opportunities that arise and impact them. It’s perhaps better suited to smaller, more agile
companies where it’s easy to change and adapt their position, but the lack of planning or analysis can
ultimately be fatal for companies that adopt this position.
So mid to long term, this isn’t a good strategic approach to take. It often will result in being slow to
market and a struggle to catch up with competitors.
Advantages of the Reactor Strategy:
 Little R&D investment needed
 Outward focused
Disadvantages of the Reactor Strategy:
 Slow to market
 Easy to fall behind
 Difficult to become market leader

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 Not prepared for changes

Should companies move between the strategies?

Yes, it’s normal for companies to move between the strategic options.
Product or service launches can come from a Prospector position, moving into a Defender position
once established, then utilizing the Analyzer position to maintain growth. For multiple product
companies, there may be an adoption of different strategic options for each market.

What are the advantages of Miles and Snow’s Organizational

Strategies?
The advantages of the model include:

 Provides a framework to talk about direction and market position.

 It ensures everyone has the same understanding
 It can help compare your org to competitors in the market
 It is easy to understand
 It applies to most markets

What tools work well with Miles and Snow’s Organizational

Strategies?
The most useful framework to use when looking at Miles and Snow’s Organizational Strategies is
Porter’s Five Forces. It provides a great overview of the forces on your profitability and your market
opportunity.
It may also be helpful to run some competitor analysis, perhaps with a model like Four Corners, in
order to establish what the strategy is for each of your competitors.

What are the alternatives to Miles and Snow’s Organizational

Strategies?
There are a number of models that help you define a company strategy. Generic Strategies and
Bowman’s Strategy Clock are two examples.

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Hypercompetition
In strategic management, Hypercompetition is a condition when the competition is so intense, creating
instability in the market. These conditions require companies to change strategies continuously.
Companies manoeuvre with each other so that changing market dynamics quickly. As a result, the
strategic competitiveness of a company can disappears immediately.
Companies often aggressively challenge their competitors. With that, they hope to improve their
competitive position and, ultimately, their performance. The basis of manoeuvring may be related to:
 The positioning of quality and prices
 Efforts for new knowledge
 Efforts to protect or attack existing geographic products or markets.

Characteristics of Hypercompetition
The following is a list of hypercompetitive market characteristics:

 High level of rivalry among the players

 Strategic maneuvers occur at a quick, intense and unexpected pace
 Rapid technological and structural changes
 Adoption of flexible strategies is common because the competitive landscape is changing
rapidly
 Low entry barriers, allowing new players to enter and challenge existing companies.
 The competitive advantage is temporary. The new strategic competitiveness would
immediately appear, destroy, and replace the old ones.

The Traditional Market

Traditionally, markets have been identified with slow-moving oligopolies (Rifkin, 1996). There was a
possibility to achieve competitive advantage, which would sustain the company in the long term.
Companies focused on reducing and avoiding competition. They would avoid price wars and head-to-
head competition, as well as increase entry barriers to keep new competitors out of their industries
(Rifkin, 1996). Today, this is no longer the case. D’Aveni says, “the old structure was: define an

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industry, reduce the level of competition and then avoid competition where possible, but I found that
successful companies were not doing any of these things. The best performers were disrupting
markets, acting as if there were no boundaries to entry" (Rifkin, 1996). A notable change has occurred
in how competition between companies works. Previously, maintaining a competitive advantage was
the standard. Now, this is impossible.

The Current Market

In today’s market environment, competitive advantage is “continually created, eroded and destroyed
and recreated through strategic maneuvering” (Rifkin, 1996). This is Hypercompetition, and it is
forcing companies to completely rethink how they do business. Resulting from hypercompetitive
activity, industry lines have blurred as companies reduce entry barriers and break into new sectors.
Cross-industrial players have emerged and will continue to drastically shape the market environments.
The current market is one marked by rapid changes, instability and creative disruption.

Causes of Hypercompetition
The next factor is the ongoing technological innovation. At present, new technology is beginning to
disrupt conventional business models. It also brings competition across national boundaries. The
company does not only compete with local companies but also global companies. Online channels
allow orders to be available from abroad more easily.
The bargaining power of buyers is also getting stronger, bringing higher pressure to producers.
Through technology, consumers nowadays are easy to compare prices between products. They can
easily switch to competing products when unsatisfied with a product. That, in turn, drives them to
want not only higher quality products but also cheaper ones.

D’Aveni 7s framework
This is the point where the D’Aveni 7s framework comes into action and tells us that we can indeed
succeed even in hypercompetitive environment by considering the help of the following 7 key points.
1. Superior stakeholder satisfaction: maximize customer satisfaction by adding value
strategically. This could be achieved by engaging with customers to make sure the product
you are developing meet those unmet needs that your competitors have not been able to
deliver yet.
2. Strategic soothsaying: seek as much new knowledge as possible for predicting new
opportunities as well as for creating needs that never existed before. Make sure you can
identify what your customers will want in the future, especially those needs that customer
cannot so far articulate themselves. Predict and drive changes!
3. Positioning for speed: make sure you always seize opportunities as well as being ready to
deploy effective counterattacks in response to any move from your competition.
4. Positioning for surprise: develop the ability to be always be the one coming out ahead of the
curve, build a position of advantage over your competitors before they can get ready to
counterattack.
5. Shifting the rules of the game: this tactic could create considerable disruption among your
competitors. Netflix, for example, shifted the rules of the DVD rental industry by allowing
people that used to rent DVD through brick-and-mortar shops to rent DVD via mail, Netflix
didn’t stop there and followed up with further disruption that led to online streaming. 

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6. Signalling strategic intent: this is what I reckon being also a bit of psychological game. You
basically announce business moves and new product releases as means to manipulate your
rivals and force them to even rethink their business strategy.
7. Simultaneous and sequential strategic thrusts: same as point 6, I see this point as a bit of
psychological game. You announce a series of simultaneous or sequential business moves
such as entering new markets, releasing new products, etc., to either mislead or confuse the
competition.

These four key goals are expanded in D’Aveni’ S paper called “Hypercompetition: Utilizing the New
7S's Framework”

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Another important point raised in the paper is about considering that it is unlikely that companies
could cover all 7 points equally well; hence the need of the trade-offs, which as for the four key
points above, are further expanded in D’Aveni’ s paper.
Because of these trade-offs, companies can analyse competitors to identify their trade-offs with the
aim of focusing on the competitor’s weak spot(s). Even when competitors are aware about being
targeted on particular weak areas, they would likely have to deplete their strengths in other stronger
areas in order to counterattack. However, hypercompetitive companies are always working very hard
to find ways to eliminate trade-offs and this has been witnessed when looking at firms that have
master the paradox of low-cost and high-quality products.
In essence, the framework sends us the message that we should not try to ride the wave of change, but
we should make it instead, with the emphasis on the importance of speed and disruption of the status
quo.

Managing Hypercompetitive Markets by Pete Flint

7 key strategies he has identified to help Founders manage a hypercompetitive market and get ahead
are:

 Become an expert on pricing

 Find and dominate the most profitable market segments
 Believing in “Everything that can be copied, will be copied”
 Take the high road with competitors
 Use capital as a competitive weapon
 Focus on being uniquely better, not just on being different
 Managing your psychology is key

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Competitive Intelligence
Competitive intelligence (CI) is a process of collecting, analyzing, and using information about
competitors or clients to improve competitive advantage. It helps understand the competitive
environment, challenges, and opportunities and use data properly to develop effective strategies.

Importance
The market changes all the time, so you need to stay ahead. You can’t build a successful business just
on guesses and assumptions. With competitive intelligence, you can understand your competitors’
motivations and behaviors. Knowing their attitude and objectives allows you to shape your product
development, pricing, and brand positioning. Competitive intelligence is the basis of your company’s
strategy.
It enables firms to gather data about the industry, environment, rivals, and competitive products or
services and analyze them. CI helps:

 identify and analyze industry trends to decide on future moves;

 obtain knowledge and insights into expectations, trends, and technologies;
 analyze strengths and weaknesses;
 allocate resources more efficiently;
 improve ROI;
 boost the process of product launching;
 predict the steps of competitors;
 make the right business decisions.

CI Methods:
 Competitive Strategy (Scenario Planning, War Gaming)
 Early Warning / Monitoring
 Research and Analysis
 CI Process Development + Consulting
 Win/Loss Analysis

Types of competitive intelligence

The main objectives of competitive intelligence are to allow a company to understand its market,
make confident strategic decisions, and increase ROI. For these purposes, businesses use different
types of CI.
Competitive intelligence activities can be divided into two main types:
 tactical (a short-term process that strives to contribute to the solution of such issues as
capturing market share or increasing profits);
 strategic (helps with long-term issues, including key risks and opportunities a company can
face).

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Now when you know the main types, it’s time to move forward and explore the sources of CI.

Seven Sources of Competitive Intelligence

 Social media platforms. Analysing customers’ comments on different social media platforms
enables you to compare your products with your competitors’ alternatives. Honest feedback
can help you improve your products and services.
 Sites of competitors. Competitors’ sites enable you to analyse their products and services,
provide you with insights into their business, and share information on their updates. Many
tools can help you make a competitor analysis like SEMrush to monitor changes in
competitors’ ranking or use Ahrefs to check any URL’s top organic keywords and determine
how much traffic your rival obtains on them.
 Syndicated research reports. These reports are crucial since they provide data on growth
forecasts, company profiles, market-related numbers, and trends. With the help of these
reports, you can obtain an overview of your market, main competitors, and what makes them
special.
 Marketing tests. Landing pages and A/B tests are particularly important as they allow you to
have an insight into the plans of your competitors. By monitoring your rivals’ campaign tests,
you can figure out what works best and what doesn’t need to be implemented.
 Product reviews. You can also analyse third-party product reviews. This information helps
you determine what customers of your rivals like and dislike about their products or services.
This way, you will obtain essential facts about competitors: their strengths and gaps. Knowing
what consumers think about goods enables you to identify your opponents’ weaknesses and
receive a competitive advantage.
 Pricing and packaging updates. Changes made to packaging and pricing also affect
marketing campaigns. That’s why it’s critical to share them with internal teams, for
instance, with sales. These updates show shifts in your rival’s strategy, for example, when
they implement business expansion.
 Changes in positioning and messaging. It’s worth mentioning that if your competitor
changes messaging or positioning, you need to monitor those changes. This way, you can
gauge the direction of your rival. For this purpose, team members visit the competitors’ sites
and focus on home pages, blog posts, landing, and product pages.
You are aware of the primary sources of information now, so let’s consider several steps to conduct
CI.

Conducting competitive intelligence

 Identify direct and indirect competitors. First of all, you need to know your competitors. If
you have a lot of them, identify at least your top five direct rivals. Afterward, determine your
indirect (firms in the same industry that don’t compete with you for customers), aspirational
(companies in the same industry that can provide inspiration for your business), and perceived
competitors (businesses that can come up during the sales discovery process but don’t
compete with you). Understanding your competitors means knowing your competitive
environment.

 Choose the main focus areas. Once rivals are identified, it’s time to determine the areas you
want to focus on for data collection. You need to gather all the information you can obtain

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online and from your front-line teams. It’s worth narrowing the search circle to process
information more efficiently.

 Gather the necessary information. During this step, you have to explore your competitors’
sites, products, social media platforms, and content. Find detailed information about each of
them.

 Conduct a competitive analysis. At this stage, your manager breaks down the information
and pulls out the main trends and the most important data. Afterward, the information is
organized in the right manner to convey it to all the teams. You need to create your
competitors’ profiles and continue to track their updates: changes in products or services and
customer reviews.

 Share your findings. To improve the strategies, share your findings with stakeholders. You
can do it by conducting a meeting, sending emails, or using an internal chat. Store data on a
reliable platform so that your team can access it easily.

 Use the information to let your company benefit. Make your data actionable for each of
your company’s teams. Your marketing team can use it to start new marketing initiatives,
while the sales team can use this data to improve scripts and sales processes.

Competitive intelligence best practices

Companies have to obtain customer trust, provide excellent customer experience, and high-quality
products to be successful. However, this process takes time and effort and requires collecting data
about competitors and customers to know what to expect. CI is the key since it allows businesses to
gather and analyze the necessary information.
 Create competitive habits. CI is a constant process, that’s why it isn’t enough to collect data
once. When you share competitive intel with your team, remember to do it wisely. There’s no
need in sharing every new piece of information with little to no context with your sales team.
Team members will spend a lot of time processing it, so it’s better to analyse how valuable
these data points are first.
 Provide relevant insights. The timing of the insights can sometimes be critical. For example,
your company’s team can face a lack of necessary data. That’s why you should have a
channel for internal communication to share your insights and different updates on
competitors and customers on time.
 Analyse your wins and losses. Companies often don’t know why they’ve won or lost a deal.
They rely on accurate feedback from their sales reps, while it would be much more effective
to interview their customers and see the notes in CRM.

Examples of Competitive Intelligence

For successful operating, each business needs to know its external environment. That’s why
companies in different industries consider competitive intelligence in their strategies.
 Start-ups. Since large companies have big budgets, resources, and necessary
technology, start-ups need to adapt to competitive intelligence insights. This way, they can
understand their customers and offer better solutions. Let’s take Airbnb, for example. This
company managed to satisfy the needs of clients by using technology and consumer insights.
 Airline tickets. A great example of using competitive intelligence is the way airlines do it.
They change the prices of their tickets every day based on the information they obtain. For
instance, if competitors increase the prices on a certain route, this company will do the same

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to receive good revenue. Besides, airline companies track the actions of potential customers to
make price adjustments. For example, they spot users who search for the same flight details
several times and increase prices.
To improve their competitive advantages, brands need competitive intelligence since it increases their
chances for success. They search for data on websites, reports, and customer feedback to understand
the gaps and undertake several improvements.

Strategic Audit
A strategic audit is an objective review and evaluation of a strategic plan (or set of plans) that have
been put into motion by senior leaders and key stakeholders designed to meet an organization’s future
objective. The audit ensures that strategic plans are pinpointed, remain relevant, and continue to create
value for the organization.

How do you audit a strategic plan?

When your team is ready to audit your organization’s strategic plan, here are 10 areas of the
organization you should consider:

1) Core Competencies
Review the unique mix of qualities that sets your organization apart from the competition, looking at
the categories of cost, service, quality, and flexibility.

2) Resources
Examine anything that supports the organization’s objectives, including cash, capital, buildings,
employee skills, brand, goodwill, and more.

3) Value Chain
Study all the activities that help or hurt the organization’s ability to achieve its objectives, including
logistics, marketing, operations, human resources, procurement, infrastructure improvements, and
more.

4) Performance
Investigate how well the organization is taking advantage of its core competencies, resources, and
value chain to meet its objectives, measured against past performance, goals, or competitors.

5) Portfolio
Study the risks and returns of all business units and investments controlled by the organization to
determine those that are strong and those that are underperforming. A portfolio audit helps to ensure
that each product or service is meeting customer needs and expectations. All products and services
have a lifecycle; every enterprise must detect which products are reaching maturity and need to be
refreshed or retired. Additionally, organizations need to be assertive in their development process and
make preparations to introduce new, game-changing products. This will keep competitors at bay while
delighting customers with needed solutions that add value. The portfolio review is all about growing
and winning in the marketplace.

6) Execution Capability
Many strategic audits have discovered that to effectively support strategic plans, leaders need to
monitor the level of ownership for new assumptions and beliefs as well as track investments, achieve
milestones, and create corresponding KPIs to measure progress and maintain accountability. All too
often, good strategies fail to deliver promised results, not because they lack good analytics and bold

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and creative ideas but because they lack conviction and the will to effectively implement their plans.
Strategic audits need to assess the level of support and passion for the strategic intentions of the
enterprise.

7) SWOT
Evaluate the organization’s strengths, weaknesses, opportunities, and threats. A SWOT audit in
strategic management gives leaders insights into how to counteract threats and seize opportunities.

8) Strategic Narrative
Assess how well leaders are communicating the new direction, priorities, and desired goals and
outcomes the organization is pursuing. In order to get traction with a strategy, everyone needs to
understand what the strategic plan is and how they fit and why they matter in relation to it. A good
audit will evaluate the quality and quantity of town-hall meetings, the content shared on the firm’s
intranet, and the videos and chat messages on the organization’s messaging platforms. Finally, team
leaders need to give team members an opportunity to absorb and engage with changes associated with
a new or refreshed strategy. Focus groups and surveys can help leaders determine the level of
understanding and commitment to the new strategy.

9) Quality of the Strategy

Strategy auditors must determine if the strategy is based on credible and privileged insights using the
sources of data above. If you want to achieve an edge over existing rivals, new entrants, or substitutes
in the marketplace, you will need to audit the quality of data, research, and your level of inquiry into
current and potential future customer segments, competitors and suppliers. Our experience suggests
that businesses that go out of their way to look at the big picture, detect new patterns and trends, and
experience the world from the customer’s point of view will excel in the market.

10) Quality of the Action Plan

Without clear roles, responsibilities, timelines, and measures of success, the strategy is only an idea.
Auditors have a special responsibility to determine the clarity, specificity, creativity, and flexibility of
the strategic action plan. This responsibility is based on feedback received through a results forum
where progress on the execution of the action plan is reviewed.

Importance
A strategic audit assesses your current business strategy, how suitable it is for your business and
whether your company is in position to execute the strategy. Performing a strategic audit on a regular
basis is crucial to the success of the business, as the strategy needs to constantly be taking into
account market conditions and changes. So how does a strategic audit work?

It Asks the Right Questions

Your strategic audit should make you consider the most basic questions about the business and the
market and help you answer them more substantially. For example, “what business am I in?” might
seem like a simple question with a simple answer. But you need to think past the obvious answer and
take a closer look. A ‘retail clothing store’ is a simple answer, whereas upon closer inspection the
answer should extend to ‘retail store offering luxury clothing to a high-end market’.

It Evaluates Your Current Strategy

The strategic audit asks you to look at how your business views itself currently in the marketplace,
and where it wants to view itself. As part of this, a SWOT analysis will be done to reassess the
strengths, weaknesses, opportunities and threats, ensuring your current strategy is working towards

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success based on these. If the findings are different and your current strategy is no longer in line with
these, then it needs to be re-evaluated.

It Highlights Strategic Risks

Failing to recognize risks has proven to be the undoing of many businesses, and traditional audits
rarely incorporate risk identification in the process. It’s important to highlight the risks to your
success, which could include a drop-off in demand for your products/services or a critical manager
leaving the company to work with a competitor. A strategic audit sheds light on these risks, allowing
you to decide which ones are the most significant and how you can act to avoid a critical situation
down the line.

It Assesses the Need for Resource Changes

If your business goals don’t match up with the resources you currently have available, then you must
either change your goals or adjust the resources available. For example, if you want to open up a new
store in the next year, but you currently have negative cashflow at your current store, you have to
assess if the goal is realistic. Another example would be if your goal was to bring a new innovative
product to market, but have no research and development dedicated to discovering innovative
products.

Implementing The Strategic Audit

The findings of the strategic audit will need to be implemented, but it isn’t as simple as that. You also
need to consider how you will measure and evaluate the performance of the implemented changes.
It’s advisable to create a plan for how your intent is to measure the effectiveness of the
implementation, to evaluate whether or not the changes worked as intended. It is important to
perform regular strategic audits and measure implementation in order to keep on top of shifts in the
environment and ensure you are always on the right path.

fin.

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