Strategic Analysis: Behind Business Success

What is strategic analysis?

Strategic analysis is like being a detective for businesses. Imagine you’re looking at a company like a puzzle, trying to understand where it stands right now and where it can go in the future. It’s all about figuring out the company’s strengths, weaknesses, opportunities, and threats. Here’s how it works in a fun, simple way:

• Big Picture Thinking: You don’t just look at one part of the business, like marketing or finance. You look at everything together to see how all the pieces fit. It’s like being a detective who needs to consider all clues from different places to solve the mystery.
• First Principles: Start with the basics, like the fundamental rules of economics. Think of it as building a house — you need a strong foundation, or everything else will fall apart.
• Strategic Reasoning: Imagine playing chess, where you need to think several moves ahead, considering your opponent’s possible actions. In business, you look at the market and competitors, like how Apple didn’t invent the first digital music player but made it big with the iPod by understanding the market better.
• Data and Tools: Use data to make smart decisions. It’s like using gadgets and maps in a treasure hunt. There are special tools and frameworks (like treasure maps) that help you analyze and understand the strategy.
• Who Does It: Strategic analysis isn’t just for CEOs. Entrepreneurs, managers, consultants, and even investors use it. It’s like how different detectives work on different cases but all need the same skills.
• Broader Impact: Understanding strategy helps everyone connect to the business, from employees to customers to even government regulators. It’s like knowing the rules of a game so you can play better and anticipate others’ moves.

In short, strategic analysis is about seeing the big picture, using smart tools and data, and thinking ahead to help businesses find the best path to success.

The Strategist’s Challenge

When one is doing a strategic analysis, one needs to ask three fundamental questions:

What are the values of the organization?

This question delves into the core of what the organization stands for, its mission, and how it defines itself. Analyzing a firm’s mission statement helps reveal its values. Here’s the mission of some great fortune companies:

• Walt Disney Company: “To be one of the world’s leading producers and providers of entertainment and information.”
• Google: “To organize the world’s information and make it universally accessible and useful.”
• Dell: “To be the most successful computer company in the world at delivering the best customer experience in markets we serve.”
• Citigroup: “To be the most respected global financial services company. Like any other public company, we’re obligated to deliver profits and growth to our shareholders. Of equal importance is to deliver these profits and generate growth responsibly.”
• Chevron: “To be the global energy company most admired for its people, partnership, and performance.”
• Ford Motor Company: “We are a global family with a proud heritage passionately committed to providing personal mobility for people around the world.”
• Facebook: “To give people the power to share and make the world more open and connected.”

What opportunities exist in the external environment?

This question explores the market landscape, identifying what the market values, demands, and how competitors are meeting these needs. Consider the example of Kodak, which failed to adapt to the advent of digital technology despite having strong values and capabilities. Understanding market opportunities and competitive effects is crucial for strategic success.

What are the company’s capabilities?

This question focuses on the internal strengths and assets of the company. It involves identifying what the company does well and how it can leverage its unique capabilities to meet market opportunities. Competitive advantage is key here; it’s not enough to be good if everyone else is too. The goal is to pinpoint what differentiates the company from its peers.

In summary, strategic analysis involves asking these three fundamental questions about values, opportunities, and capabilities. It’s at the intersection of these questions that valuable competitive positions are revealed, allowing organizations to thrive and create the most value for their stakeholders.

However, as you can imagine, Strategic analysis is like being a business detective! You start by uncovering what the company truly values, whether it’s Disney’s entertainment magic or Google’s quest to organize the world’s information. Then, you search for opportunities in the market, making sure you don’t miss any treasures like Kodak did. Finally, you identify the company’s unique strengths that set it apart from the competition. In a nutshell, strategic analysis is all about solving the business puzzle to find the best path to success!

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