STRATEGIC

BUSINESS ANALYSIS
Strategic Business Analysis
(aka Enterprise Analysis)
 It is a process that involves researching an organization’s business environment within
which it operates. This is essential to formulate strategic planning for decision-making and
smooth working of that organization.
 It encompasses all of the pre-project work to identify business problems, define business
opportunities, develop a business case, and recommend whether to initiate a project. 
 This also refers to actions and decisions made by the management while trying to
understand the impact of strategic events, like:
1. introduction or development of new product line,
2. setting up a factory in a new location,
3. employing key staff,
4. selecting organizational structure,
5. investing in new technology,
6. managing risks,
7. complying with relevant law and regulations
 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.
 Strategic business analysis in modern day business is hard to
separate from strategic management and planning where
management have to battle with the ever changing business
environment. It depicts the role of strategy in the business.
 The purpose of a strategic analysis is to analyze an organization’s
external and internal environment, assess current strategies, and
generate and evaluate the most successful strategic alternatives.
CHARACTERISTICS OF STRATEGIC
BUSINESS ANALYSIS
1. LONG TERM IN NATURE. For any business analysis to be strategic in nature,
it must have a long term view. When designing a balanced scorecard for example,
management should think of the impact that each target and objectives contained in
the strategic map will do to the long run survival of the company.
2. FOCUS ON EXTERNAL EVENTS AND ACTIVITIES. Senior managers
spend about 60% of their time gathering and interpreting information from outside
source which will significantly improve decision making process. They interact with
people and organizations outside the entity in order to achieve this goal.
3. PLACE MORE EMPHASIS ON QUALITATIVE MATTERS. In as much as
financial indicators play vital role in shaping the fortune of a business entity,
attention should also be given to those qualitative factors that an establishment
cannot afford to ignore or else, business failure will imminent.
ADVANTAGES AND DISADVANTAGES
OF STRATEGIC BUSINESS ANALYSIS
ADVANTAGES
 Monitor and control progress through management accounting
records
 Makes management think in advance
 Optimizes the use of scarce resources
 Ensures consistency in the pursuit of goals and objectives
 Seamlessly make organization fit into its environment
 Guides the path of the business
DISADVANTAGES
 Could be expensive in terms of time and money
 Could lead to bottleneck and bureaucracy
 Not so useful in managing crisis
 Blindfold management from identifying and taking opportunities as
they arise
TYPES OF STRATEGIC BUSINESS
ANALYSIS
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 analysis of the strengths of the company should be oriented to the market,
focusing on the client. The strengths only make sense when they help the company to
fulfill client’s needs. When doing an internal strategic analysis one should also know
the weaknesses and limitations that a company faces existentially or in the future.
 SWOT analysis is one of the most reputed techniques for internal strategic
analysis. There is no better way to benefit from a strategically performed analysis
than to use it to detect the strengths, opportunities, weaknesses, and threats that your
project may suffer.

Performing SWOT analysis will help you create a strong and long term vision
through strategic planning for your organization. The important thing is to constantly
evaluate the environment in which the company operates, and act accordingly. It is
essential for an organization to take into account the SWOT principle in order to be
able to plan efficiently. Through a thorough SWOT analysis companies will be able
to prevent a number of problems that can arise if there is no systematic analysis.
Strengths of a company. There are several attributes within the company that are positive,
that you can control in order to obtain better results. Those 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 competitors.

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.
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 be 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.

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.
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 is one of the most widely used external analysis techniques. The
process one is most likely to adopt when using a PESTLE technique is relatively a simple
one.
PESTLE analysis (Political, Economic, Social, 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 macro-environmental factors that the organization has to take into consideration.
By using PESTLE analysis one can:
1. 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.
2. Identify the impact of each issue.
3. See how important these issues are to the organization.
4. Rate the likelihood of its occurrence.
5. Briefly consider the implications if the issue did occur.
STATEGIC BUSINESS ANALYSIS
PROCESS
1. Perform an environmental analysis of current strategies
Starting from the beginning, a company needs to complete an environmental
analysis of its current strategies. Internal environment considerations include
issues such as operational inefficiencies, employee morale, and constraints
from financial issues. External environment considerations include political
trends, economic shifts, and changes in consumer tastes.

2. Determine the effectiveness of existing strategies

A key purpose of a strategic analysis is to determine the effectiveness of the
current strategy amid the prevailing business environment. Strategists must
ask themselves questions such as: Is our strategy failing or succeeding? Will
we meet our stated goals? Does our strategy align with our vision, mission,
and values?
3. Formulate plans
If the answer to the questions posed in the assessment stage is “No” or
“Unsure,” we undergo a planning stage where the company proposes
strategic alternatives. Strategists may propose ways to keep costs low
and operations leaner. Potential strategic alternatives include changes
in capital structure, changes in supply chain management, or any other
alternative to a business process.
4. Recommend and implement the most viable strategy
Lastly, after assessing strategies and proposing alternatives, we reach a
recommendation. After assessing all possible strategic alternatives, we choose
to implement the most viable and quantitatively profitable strategy. After
producing a recommendation, we iteratively repeat the entire process.
Strategies must be implemented, assessed, and re-assessed. They must change
because business environments are not static.