Strategy is a series or plan of action designed to benefit the organisation in the long term. In the rapidly changing world, the organisation might face business turbulence and uncertainty. To mitigate this the concept of strategy was developed. There are three kinds of strategy that a business might develop in order to fulfil stakeholder requirements. They are
- Corporate Strategy – This is fairly high level. It caters to the needs of the business. This is driven by the governments, investors, etc.
- Business Unit Strategy – To achieve the this the business units develop their strategies.
- Operational Strategy – By effectively managing the resources, people and processed, the operational strategy helps achieve the business unit strategy and eventually the corporate strategy.
In order to develop a strategy it is vital that one analysis the factors affecting the business. These factors can be determined using two types of analysis: External Environment Analysis and Internal Environment Analysis.
External Environment Analysis
Let’s look at a few frameworks that can help us analyse the external forces that impact a business.
Porter’s Five Forces Model
Internal Environment Analysis
Let’s look at a few frameworks that can help us analyse the internal forces that impact a business.
In order to asses the current business positioning and situation, MOST Analysis technique is used. The four factors of a business that it examines are:
Boston box helps us to analyse the business portfolio. This method helps us in identifying the value of each SBU(Strategic Business Unit) of an organisation. A Star is the most value adding portfolio, most profitable one. A Cash Cow is the SBU that is generating the funding for the other segments and is a mature product. The Cat or Problem Child is the SBU that are currently unprofitable but could be valuable in the future. The Dogs are often the SBUs that need to be eliminated.
SWOT Analysis is used to combine the results of both the external and internal environmental analysis. It depicts the Strengths and Weakness (Internal) & Threats and Opportunities (External).
I hope this blog has been helpful. Stay tuned for the next one on the various Investigation Techniques that can be used to analyse the problem at hand!
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