BBM 462: STRATEGIC MANAGEMENT NOTES

Dr. Gloria Tuwei

STRATEGIC MANAGEMENT

1.0 INTRODUCTION

Strategic management involves developing and implementing plans to help an organization

achieve its goals and objectives. This process can include formulating strategy, planning
organizational structure and resource allocation, leading change initiatives, and controlling
processes and resources.

Strategic planning involves identifying business challenges, choosing the best strategy,
monitoring progress, and then making adjustments to the executed strategy to improve
performance. Tools like SWOT (strengths, weaknesses, opportunities, and threats) analysis are
used to assess where opportunities and threats lie between the organization, its competition, and
the overall market.

Strategic management happens at broader levels like organization-wide leadership, but it can
also be implemented at a department or team level.

2.0 APPROACHES TO STRATEGIC MANAGEMENT

2.1 Classical Approach

This approach emphasizes rationality and a systematic planning process. It typically involves a
step-by-step process of setting objectives, analyzing the internal and external environment,
formulating strategies, implementing plans, and monitoring results. This approach is often
associated with traditional strategic planning models.

2.2 Evolutionary Approach

This approach views strategy formulation as an ongoing, adaptive process rather than a one-time
event. It emphasizes learning and continuous adjustment to changes in the business environment.
Strategies evolve over time in response to feedback and experience.

2.3 Resource-Based View (RBV)

RBV focuses on the internal resources and capabilities of an organization as the primary drivers
of competitive advantage. It suggests that firms should develop unique resources that are
valuable, rare, and difficult to imitate or substitute. The RBV approach emphasizes leveraging
internal strengths to exploit external opportunities.

2.4 Market-Based View (MBV)

MBV focuses on understanding and responding to market dynamics. It emphasizes market

positioning, customer needs, and competitive forces. Strategies are formulated based on market
analysis, segmentation, targeting, and positioning.

2.5 Competitive Dynamics Approach

This approach emphasizes understanding and influencing the competitive interactions among
firms within an industry. It involves analyzing competitive moves and responses, anticipating
competitor behavior, and developing strategies to gain a competitive edge.

2.6 Game Theory Approach

Game theory is used to analyze strategic interactions among competing firms. It involves
modeling strategic decisions as games and predicting outcomes based on the choices of rational
actors. Strategies are formulated considering the possible actions and reactions of competitors.

2.7 Blue Ocean Strategy

This approach involves creating uncontested market space by innovating and offering unique
value propositions. It focuses on finding new market opportunities rather than competing in
existing markets. Blue Ocean Strategy aims to make competition irrelevant by creating new
demand and capturing untapped market space.

2.8 Scenario Planning

Scenario planning involves creating multiple plausible future scenarios and developing
strategies to address each potential future. It helps organizations anticipate and prepare for a
range of possible outcomes, reducing vulnerability to uncertainty and volatility.

2.9 Lean Strategy

Lean strategy focuses on eliminating waste and maximizing efficiency in operations and
processes. It involves continuous improvement, customer value creation, and a relentless focus
on delivering quality products and services at lower costs.

Collaborative Strategy

This approach emphasizes collaboration and partnerships with other organizations, suppliers,
customers, and stakeholders. It involves forming alliances, joint ventures, and strategic
partnerships to achieve mutual goals and create value.

3.0 Benefits of strategic management

The strategic management process helps an organization's leadership plan for its future goals.
Setting a roadmap and actionable plan ensures that employees and leaders know where they're
going and how to get there in the most efficient, cost-effective manner. It is a work in progress,
so strategic plans should continuously be evaluated and adjusted as the market outlook changes.

3.1 Financial benefits:

Increase market share and profitability.

Prevent legal risk.

Improve revenue and cash flow.

3.2 Non-financial benefits:

Relieves the board of directors of responsibilities.

Allows for an objective review and assessment.

Enables an organization to measure progress throughout time.

Provides a big-picture perspective of the organization's future

Strategic management involves a series of interconnected processes aimed at formulating,

implementing, and evaluating strategies to achieve organizational objectives and sustain
competitive advantage. The strategic management process typically consists of the following
stages:
4.0 STRATEGIC MANAGEMENT FRAMEWORKS

Strategic management frameworks help you approach strategic management process in a more
detailed away

4.1 SWOT analysis

SWOT analysis guides you in identifying your strengths, weaknesses, opportunities, and threats
for your business strategy. When working through the strategic management process, factor a
SWOT analysis into the “Analyze” phase, as it helps establish your baseline and where you can
go from there.

4.2 Balanced scorecard

A balanced scorecard can help you evaluate four major elements of a business: learning and
growth, business processes, customer satisfaction, and financial performance. By analyzing these
aspects separately, you can visualize where your organization has a competitive advantage and
where you can make improvements.

Like a SWOT analysis, this framework can help you during the “Analyze” phase, as it dives into
your baseline for each aspect of your business model.

4.3 Value chain analysis

The value chain describes the systems and processes involved in producing new products or
services. Analyzing the value chain allows organizations to identify opportunities for
improvement within the project life cycle. Some questions that come from value chain analysis
include:

Is there an opportunity for cost reduction?

Can we streamline this process?

What can we do to make our product or service different from competitors?

Diving into a value chain analysis will help you pick apart your process and add more specific
plans to your strategic management process.
5.0 STRATEGIC MANAGEMENT PROCESS

5.1 ENVIROMENTAL ANAYLYSIS

Analysis involves gathering the data and information that is relevant to accomplishing the set
goals. It also covers understanding the needs of the business in the market and examining any
internal and external data that may affect the organization’s goals Data collection and strategic
planning determine the first stage of the strategic management process. For instance, if you want
to tap into consumer goods, gathering primary or secondary data to assess customer preferences
and trends helps in strategizing. You can also identify potential problem areas in current
strategies.

VARIOUS ACTIVITIES PERFORMED

SWOT Analysis

Integrating the findings from the environmental analysis to identify strategic options. SWOT
analysis involves identifying strengths, weaknesses, opportunities, and threats facing the
organization.

External Environment Analysis

This involves assessing the macro-environmental factors such as political, economic, social,
technological, environmental, and legal (PESTEL analysis) factors, as well as industry-specific
factors (Porter's Five Forces analysis).

Internal Environment Analysis

This entails evaluating the organization's resources, capabilities, strengths, weaknesses, culture,
and structure to identify core competencies and areas for improvement.

5.2 STRATEGY FORMULATION

The second step in the strategic management process is the most important. This is where you
form an action plan. It’s time to use the data collected in the last step to formulating a strategy.
For instance, once you have identified which products are trending in the last step, you can plan
a strategy around manufacturing, advertising, and delivery.
A business will only succeed if it has the resources required to reach the goals set in the first
step. The process of formulating a strategy to achieve this may involve identifying which
external resources the business needs to succeed, and which goals must be prioritized.

VARIOUS ACTIVITIES PERFORMED

Mission, Vision, and Values

Establishing the organization's mission (its purpose), vision (its future aspirations), and core
values (its guiding principles).

Setting Objectives

Defining specific, measurable, achievable, relevant, and time-bound (SMART) objectives

aligned with the mission and vision.

Strategy Development

Developing strategies at corporate, business, and functional levels. Corporate strategy

determines the scope of the organization's activities, business strategy focuses on how to
compete within a particular industry, and functional strategies guide activities within specific
departments or functions.

5.3 STRATEGY IMPLEMENTATION AND STRATEGY EXECUTION

The purpose of formulating a strategy is to implement it. The penultimate step in the strategic
management process requires you to put your plan into action. As each member understands
their role, they can work together or independently to execute the plan. Since the purpose of
strategic management process is to propel an organization to its objectives, an implementation
plan must be put in place before the process is considered viable. Everyone in the organization
must understand the process and know what their duties and responsibilities are in order to fit in
with the organization’s overall goal.

VARIOUS ACTIVITIES PERFORMED

Resource Allocation

Allocating financial, human, and other resources to support strategic initiatives.

Organizational Design

Structuring the organization to align with the chosen strategies. This may involve changes in
roles, responsibilities, reporting relationships, and workflows.

Policies and Procedures

Establishing policies, procedures, and guidelines to guide decision-making and behavior in line
with strategic objectives.

Change Management

Managing the process of organizational change that accompanies strategy implementation. This
may involve communication, training, and addressing resistance to change.

Operational Planning

Translating strategic objectives into specific action plans, projects, and initiatives.

Monitoring and Control

Tracking progress against strategic objectives, identifying deviations, and taking corrective
actions as necessary.

Performance Management

Establishing performance metrics and systems to measure and evaluate progress towards
strategic goals.

5.4 STRATEGY EVALUATION, CONTROL AND MONITORING

The evaluation and control actions for the strategic management process include performance
appraisal as well constant review of both internal and external issues. Where necessary, the
management of the organization can implement corrective actions to ensure success of the SMP.
In order for a business’ efforts to have the most impact on a business’ bottom line, strategic
management process must be employed. This will also go a long way in helping a business to
survive stiff competition in the market. Strategic management isn’t a one-and-done thing. Your
management strategy and business environment also change as your company matures. Similar
to how you should revisit your strategic plan every three to five years, make sure you’re
revisiting your overall strategic management plan regularly as well. Take into consideration any
new potential threats, relevant success metrics, and developing avenues your business may want
to pursue.

ACTIVITIES PERFORMED

Performance Evaluation

Assessing the effectiveness of implemented strategies and their impact on organizational

performance.

Learning and Adaptation

Gathering feedback from the implementation process and environmental changes to adjust
strategies as needed. This may involve revisiting the strategic management process to make
iterative improvements.

6.0 ANALYZING COMPANY RESOURCES AND COMPETITIVE POSITION.

RESOURCE ANALYSIS.
6.1 INTRODUCTION.
Resource analysis stands for the steps you take to identify and realistically evaluate all the
resources at your disposal (resource availability) to reach a specific objective or deliver a project.
it's a method for collecting and analyzing data about the people needed to complete a project. It's
a means to construct an accurate picture of exactly how long your project will take, how many
people will be needed to complete it, how many people you currently have available, and how
much money the initiative will cost altogether.

6.2 SOME OF THESE RESOURCES ARE:

Financial Resources. Cash and Cash Equivalents: These include money in bank
accounts, short-term investments, and liquid assets, Accounts Receivable: Money owed
to the company by customers, Inventory: The value of goods held for sale, Fixed Assets:
Property, equipment, and land owned by the company, Investments: Stocks, bonds, or
other securities held by the company and Debt: Any outstanding loans or liabilities.
 Human Resources: Employees: Assess the number, skills, and roles of employees,
Training and Development: Evaluate programs to enhance employee skills, Workforce
Planning: Ensure the right people are in the right roles, Employee Satisfaction: Measure
morale and engagement.
Physical Resources: Facilities: Office space, factories, warehouses, Equipment and
Machinery: Tools needed for production, Technology Infrastructure: Computers,
servers, software licenses, Vehicles: Company-owned vehicles for transportation.
Intellectual Resources, Intellectual Property: Patents, trademarks, copyrights, Trade
Secrets: Proprietary information and Knowledge Base: Expertise within the
organization.
Natural Resources: Raw Materials: Essential for production, Energy Sources:
Electricity, fuel, etc.

6.3 WHY RESOURCE ANALYSIS IS IMPORTANT?

Before anything else, a company's resource and capability analysis helps you make sure that you
not only have the needed resources but also use them wisely and efficiently. You get to find out
what resources are crucial for the success of your business, and which areas of the company or
product need more focus, investment, and improvement.
A lot of times, people make plans with little idea of what they'll actually need to pull it off. When
they start moving forward, they're surprised by all sorts of obstacles. They end up having to
scramble for financing or they realize they don't have enough time to finish the job properly or
they just don't have the know-how to do what needs doing.
A resource-based view analysis gives you a chance to look into those things before you start,
which will make your project better from the beginning and save a lot of headaches down the
line.

When resource analysis helps

Building a resource based view analysis can be of use in a number of cases.
 When you need to optimize resourses. When a new project comes in, you need to see
what resources you have available, how you can engage them in the upcoming project,
and what you need to do in order to reach maximum efficiency with what you already
have so you don't have to hire or outsource unnecessarily.
When you want to identify your limitations. In this case, limiting factors are the
things that can slow down or kill a project if they aren't available when it needs them.
For example, if your company is building an office building and has scheduled 5,000
man hours for construction, but the construction crew has only 4,000 man hours
available, that's a situation that needs to be dealt with before it becomes an issue with the
project.
When you want to hire right. Making random guesses when scaling your team or
company can backfire — you might be forced to scale down after a string of
unsuccessful projects. But with a resource analysis on the table, your human resource
gap analysis will be much more realistic. You will know exactly what teams need
reinforcements, what kind of reinforcements, for how long, etc.

6.4 STEPS TO PERFORMING AN EFFECTIVE RESOURCE ANALYSIS.

There are different ways to carry out a resource analysis. But it's best if you always look at
different metrics to understand the full picture.
1.1. Analyze your resource pool.
Resource and capability analysis is designed to give you in-depth insights into your resource
capacity. This is why you need to start by looking at availability — is there anyone under booked
who can work on your upcoming project? Is someone getting overbooked and might have to
work extra (which you want to avoid)? Remember to account for vacations, day-offs, and force
majeure situations here. check which roles or teams have the most availability. Is there any way
you can optimize those resources or rearrange them to meet the upcoming project needs with
what you currently have?
 1.2. Compare confirmed workload vs capacity.
you can compare each individual's capacity and the workload that has already been confirmed.
Keep in mind that some projects get cancelled, changed, shrunk or expanded so if the workload
hasn't been confirmed there yet.
1.3. Look at utilization rates.
Utilization rates will show you how many hours of your team's work are billable and non-
billable. For example, when someone is doing admin work, this is beneficial for your company
but it is not something you can charge your clients for.
Human resource analysis should help you see if your team is hitting high utilization rates. And if
that's the case there might be little room for resource optimization which means you will have to
add more hands to the team.
1.4. Check existing placeholders for new resources.
You use placeholders when you have a project to plan out but don't know who to assign to it just
now. Creating those placeholders is, in a sense, like doing a jigsaw puzzle. You first get a
picture, a frame to hold it, and then match the right puzzle piece to the spot where it belongs.
1.5. Drill down into the numbers.
One of the well-known dangers of project management and resource analysis is the fact that it
can get increasingly fragmented. You can end up with dozens of dashboards, each showing you a
little bit of everything but nothing truly valuable. Add to that a team of over a hundred people or
even multiple projects — and things can get ugly, literally.
1.6. Do scenario Planning for all the what-ifs
This is something everyone wishes they could do in their personal life: when choosing a career,
moving to a new city, or eating too much cake. But in advanced project management, those
what-ifs are very much a reality — they call it scenario planning.

6.5 COMPETITIVE ANALYSIS.

Competitive analysis, is the systematic process of gathering and evaluating information about
your competitors to gain a deep understanding of the competitive landscape in your industry. It
involves delving into your competitors’ business models, marketing practices, product offerings,
target audiences and much more.
This practice helps you keep a pulse on competing products in the market and make well-
informed decisions for your business. It also enables you to find opportunities for growth,
anticipate trends and proactively respond to potential threats.

HOW TO DO COMPETITOR ANALYSIS.

To harness these advantages, you’ll need to learn how to perform competitive analysis
effectively. The process is quite structured and involves several key steps to ensure that you
gather relevant data and gain actionable insights.
1. Identify your competitors
2. Define your objectives
3. Collect data
4. Look for the 4 Ps
5. Conduct a SWOT analysis

Identify your competitors

To pinpoint your competitors, create a list of organizations that compete with you both directly
and indirectly in the marketplace.
Direct competitors are organizations that offer similar products or services to the same target
audience. In other words, they’re the businesses that potential customers could choose instead of
your company.
To identify your direct competition, start by examining businesses that operate in the same
industry or niche. Ask yourself questions such as:
Who offers products or services that are nearly identical to ours?
Who targets the same customer segments and geographical areas as we do?
Who are our primary rivals when it comes to market share and sales?
Once you have identified these direct competitors, you can create a list or spreadsheet to keep
track of their names, key characteristics and any available data that will be useful in your
analysis.
Next, you’ll want to identify your indirect competitors. Indirect competitors serve a similar target
market as your company, but may offer different products or services. They are indirect rivals
because they can influence consumer choices, even though they are not in direct competition
with your business. To identify indirect competitors:
Look for businesses that serve the same customer needs, even if their products or services are not
identical to yours.
Consider how customers might choose between your offerings and those of indirect competitors.
Examine businesses that could potentially expand into your market.
Including both direct and indirect competitors in your analysis provides a more holistic view of
your competitive landscape and helps you anticipate shifts in consumer preferences or market
dynamics.
Remember that the business environment is constantly changing, and new competitors may
emerge over time. Regularly updating your list of competitors is essential to ensure that your
competitor analysis stays relevant.

Define your objectives

The next step in competitive analysis is to clearly outline your objectives. This will ensure that
you’re gathering relevant information that directly supports your business strategy. Here’s how
to define your objectives effectively:
Clarify your goals: Begin by outlining your overarching goals. Common objectives may include
improving market share, optimizing pricing strategies, enhancing product development or
refining marketing tactics.
Identify your information needs: Use your goals to determine exactly what kind of information
you’ll need. Ask yourself: What kind of data or insights will be most helpful in achieving your
stated objectives? For example, if you want to improve product development, you may need data
on your competitors’ product features, customer reviews and pricing.
Develop KPIs: Write down the key performance indicators that are most relevant to your
objectives. KPIs are quantifiable metrics that will help you measure your progress. For instance,
if your goal is to enhance marketing strategies, relevant KPIs might include website traffic,
conversion rates or social media engagement.
Determine a time frame: Understanding the time frame of this project will influence the depth
and scope of your analysis. Are you conducting a one-time competitor analysis, or is this an
ongoing process?
Align with business strategy: Ensure that the above aligns with your overall business strategy.
Your competitor analysis should directly contribute to the success and growth of your business.
Adapt when necessary: Be open to adjusting your objectives as needed. The business landscape
can change rapidly, and you may need to adapt in response to new opportunities or challenges.
When you define your objectives, you give yourself a clear roadmap for your research. This
helps you focus on gathering the most pertinent data and ensures that your analysis directly
benefits your business. Whether you’re looking to outperform competitors in a particular area or
gain a broader understanding of the competitive landscape, well-defined objectives are the
cornerstone of a successful analysis.

Collect data.
Effective data collection is another fundamental step in the competitor analysis process, as the
quality and relevance of the data you gather directly influence the insights you gain. Begin by
identifying data sources that will give you the information you’re looking for. These sources can
include both online and offline channels.
Online sources are often the richest and most accessible.
Common data sources for competitive monitoring include:
Crunch base: Crunch base is a valuable resource for gathering data about companies, including
your competitors. It offers details about a company’s firmographics, funding, leadership team,
investor relationships and key metrics. This data helps you understand your competitors’
financial health, investment history, growth strategies and potential areas of expansion.
Company websites: Competitor websites are valuable sources of information about your
competitors’ products, services, pricing and promotional strategies. They provide direct insights
into how your competitors present themselves to customers and the market.
Social media: Social media platforms such as Facebook, X (formerly
Twitter), Instagram and LinkedIn offer a glimpse into your competitors’ marketing and
promotional efforts. Analyze their posts, content engagement and follower interactions to
understand their messaging and customer engagement strategies. You can also use social media
to monitor comments, reviews and conversations to gauge customer sentiment and identify your
competitors’ strengths and weaknesses.
Customer review sites: Review sites like G2, dedicated industry-specific review platforms also
offer candid customer feedback. Analyze the reviews to understand customer satisfaction levels,
identify pain points and discover areas where your competitors excel or underperform. Some
reviews may also mention pricing, which can help you determine how customers perceive the
value of your competitors’ products or services.
Market reports: Market research companies like Nielsen, Gartner, Forrester and Euro monitor
International often produce comprehensive market reports across various industries. They often
include data on market size, growth projections and emerging opportunities, helping you assess
the overall landscape your competitors operate in. Market reports may also include company
profiles, giving you information about their market share, strategies and financial performance.
Industry publications: Business publications and journals often publish in-depth articles and
analysis about trends, innovations and market players. They can provide valuable information
about your competitors’ strategies, market positioning and noteworthy developments. Crunch
base News, which offers data-driven reporting on private markets, is a great place to start.
Government databases: Government databases can provide access to financial and regulatory
information about companies, including your competitors. This data may include financial
statements, business registrations and industry-specific regulatory compliance, helping you
understand their financial health and legal compliance.

Look for the 4 Ps

Next, you’ll want to analyze your competitors’ marketing strategies. A systematic way to
approach this is by looking at the 4 Ps of marketing, also known as the marketing mix. These are
product, price, place and promotion, which you can break down into the following questions:
Product
What are the key features and attributes of our competitors’ products?
How does the quality of our competitors’ products compare to ours?
Are there any unique or innovative features in our competitors’ products that we should be aware
of?
What is the product life cycle of our competitors’ offerings, and how does that impact their
market presence?
How do our competitors brand and position their products in the market?
Do our competitors offer a wide product range, or do they focus on a niche market?
What are the customer reviews and feedback on our competitors’ products, and what strengths or
weaknesses do they highlight?
How do our competitors handle product updates, customer support and warranties?

Price
What are the pricing strategies employed by our competitors (e.g., premium, value, competitive
or penetration pricing)?
How do our competitors price their products or services compared to our pricing?
What types of discounts, promotions or special offers do our competitors use, and how
frequently do they change them?
Do our competitors offer bundle pricing or product packages?
How do our competitors handle pricing changes and adjustments based on market conditions or
demand?
What is the perceived value of our competitors’ products or services in relation to their pricing?
Are there any loyalty programs or customer rewards related to pricing that our competitors offer?
How do competitors communicate their pricing to customers, and does it align with their
branding and positioning strategies?
Place (distribution)
What distribution channels do our competitors use to reach their customers (e.g., direct sales,
retailers, e-commerce or wholesalers)?
How extensive is the geographic reach of our competitors’ distribution networks?
Are there specific partnerships or collaborations that our competitors have with distributors or
retailers?
What is the availability and accessibility of our competitors’ products or services, both online
and offline?
How do our competitors handle inventory management, logistics and fulfillment to ensure timely
delivery to customers?
Do our competitors have a physical presence, and how does it impact their brand and customer
engagement?
What is the overall customer experience with the distribution and availability of our competitors’
offerings?
Are there any supply chain or distribution challenges that our competitors face?

Promotion
What are the core elements of our competitors’ marketing and advertising strategies (e.g., online
ads, content marketing, social media, traditional media)?
How do our competitors position their brand, and what is their unique selling proposition?
What messaging and tone do our competitors use in their advertising and marketing campaigns?
How do our competitors engage with customers on social media, and how do they manage their
online reputation?
What content marketing tactics do our competitors employ to educate and engage their audience?
Do our competitors use influencer marketing or partnerships with other brands or organizations?
What customer feedback, testimonials or case studies do our competitors use in their promotional
materials?
How do our competitors measure the success and impact of their promotional efforts, and what
adjustments do they make based on these metrics?
These questions will force you to think hard about your competitors and the ways they position
their product or service in the market. Be sure to make a note of these data points so you have an
organized spreadsheet with your competitive analysis.
Conduct a SWOT analysis. Now, conduct a SWOT analysis using all the data and insights
you’ve gathered. A SWOT analysis is a competitive analysis framework for systematically
evaluating your competitors’ strengths, weaknesses, opportunities and threats. Create a table or
slide deck with the following notes about each competitor.
Strengths: Consider areas like product quality, brand reputation, financial stability and unique
capabilities. What does your competitor excel at? What are their key assets and resources? What
advantages do they have over your business and other competitors?
Weaknesses: Analyze your competitors’ weaknesses, which are internal factors that put them at
a disadvantage. Evaluate areas where they struggle, such as customer service issues, product
limitations or operational inefficiencies. Where does your competitor fall short? What are their
operational or financial weaknesses? Are there aspects of their products or services that receive
consistent criticism?
Opportunities: Consider the external factors and opportunities that your competitors can
capitalize on. These may include market trends, emerging customer needs, technological
advancements or changes in regulations. Here, you’ll want to ask yourself the following
questions: What market opportunities are your competitors pursuing? Are there emerging trends
that they are well-positioned to benefit from? How do they adapt to changing market conditions
and customer demands?
Threats: Evaluate the external factors and threats that pose risks to your competitors’ business.
These could be increased competition, economic downturns, changing consumer preferences or
regulatory challenges. What are the external threats that our competitors face? How do market or
industry conditions pose risks to their operations? Are there competitive pressures that could
erode their market share?

CONCLUSIONS.
Analysis of the characteristics of knowledge and the process through which it is created and
deployed offers striking insights into the principles and practices of management – including the
development of organizational capability. Given the scope of knowledge management and the
vast range of tools, techniques, and frameworks that have been developed, where does a
company begin to incorporate knowledge management within its management systems? A useful
starting is to identify the linkage between knowledge and the basis on which the firm creates
value. This can then highlight the key processes through which knowledge is generated and
applied.

7.0 A CONCEPT ON THE TOOLS OF STRATEGIC ANALYSIS

STRATEGIC ANALYSIS

Strategic analysis is a process used by organizations to examine their internal and external
environments in order to understand their current position, identify strengths and weaknesses,
anticipate opportunities and threats, and develop effective strategies to achieve their goals. It
involves evaluating various factors that could impact the organization's performance and
competitiveness in the marketplace.

COMPONENTS OF STRATEGIC ANALYSIS

Internal analysis

This involves assessing the organization's resources, capabilities, and core competencies. It
examines factors such as financial performance, operational efficiency, human resources,
technology, and organizational culture.

External analysis

This involves evaluating the external environment in which the organization operates. This
includes analyzing the industry structure, market trends, customer preferences, competitive
landscape, regulatory environment, economic conditions, and technological advancements.

SWOT analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is a framework used to
identify and analyze the internal and external factors that can impact the organization's ability to
achieve its objectives. Strengths and weaknesses are internal factors, while opportunities and
threats are external factors.

Competitor analysis
This involves researching and analyzing competitors to understand their strategies, strengths,
weaknesses, and market positioning. It helps organizations identify competitive advantages and
areas where they need to improve.

Market analysis

This involves studying the target market, including demographics, preferences, behavior, and
trends. It helps organizations identify opportunities for growth and develop targeted marketing
strategies.

Trend analysis

This involves identifying and analyzing trends in the industry, economy, technology, and society
that could impact the organization's future prospects. It helps organizations anticipate changes
and adapt their strategies accordingly.

TOOLS OF STRATEGIC ANALYSIS

SWOT ANALYSIS

SWOT analysis is a strategic planning tool used to identify and evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a business venture, project, or organization.
It helps in understanding the internal and external factors that can impact the success or failure of
a strategy or decision. By conducting a SWOT analysis, organizations can gain valuable insights
into their internal capabilities and external environment, enabling them to make informed
strategic decisions, capitalize on opportunities, address weaknesses, and mitigate threats. It
serves as a foundation for developing robust strategies that align with organizational goals and
objectives, ultimately enhancing competitiveness and driving sustainable growth.

BREAKDOWN OF SWOT ANAYLYSIS

Strengths (Internal, Positive):

Strengths are internal attributes or resources that give an organization a competitive advantage
over others.
These could include factors such as a strong brand reputation, unique products or services,
talented workforce, efficient processes, proprietary technology or patents, loyal customer base,
and financial stability.

By identifying strengths, organizations can leverage them to capitalize on opportunities and

mitigate threats.

Weaknesses (Internal, Negative):

Weaknesses are internal factors that place an organization at a disadvantage compared to others.

These could include aspects like poor financial performance, limited resources, lack of brand
recognition, outdated technology, ineffective management, or deficiencies in skills and expertise.

Identifying weaknesses helps organizations address areas that need improvement and develop
strategies to overcome challenges.

Opportunities (External, Positive):

Opportunities are external factors or trends in the market that an organization can exploit to its
advantage.

These could include emerging market trends, changes in consumer behavior, technological
advancements, expansion into new markets, strategic partnerships or alliances, or regulatory
changes that favor the organization's industry.

By identifying opportunities, organizations can develop strategies to capitalize on them and gain
a competitive edge.

Threats (External, Negative):

Threats are external factors or challenges that could potentially harm an organization's
performance or viability.

These could include factors such as intense competition, economic downturns, market saturation,
changes in government regulations, disruptive technologies, or shifts in consumer preferences.

Identifying threats allows organizations to anticipate risks and develop contingency plans to
mitigate their impact and safeguard against potential pitfalls.
PESTLE ANALYSIS AS ATOOL

PESTLE analysis is a strategic tool used by organizations to assess the external factors affecting
their business environment. It stands for Political, Economic, Social, Technological, Legal, and
Environmental factors. Each of these categories represents different aspects of the external
environment that can impact the organization's operations, opportunities, and threats.

Political Factors

This category includes factors related to government policies, regulations, and stability. Political
factors can significantly influence business operations, especially in industries that are highly
regulated or sensitive to government actions. Examples include taxation policies, trade
regulations, political stability, government stability, and government spending priorities.

Economic Factors

Economic factors refer to the overall economic conditions in the markets where the organization
operates. This includes factors such as economic growth, inflation rates, exchange rates, interest
rates, unemployment rates, and consumer spending patterns. Economic factors can have a
profound impact on consumer purchasing power, demand for goods and services, and overall
business profitability.

Social Factors

Social factors encompass demographic trends, cultural norms, lifestyle preferences, and societal
values. Changes in social factors can influence consumer behavior, market demand, and the
perception of the organization's products or services. Examples include population
demographics, education levels, income distribution, lifestyle trends, and attitudes toward
sustainability and social responsibility.

Technological Factors

Technological factors pertain to advancements in technology that can disrupt industries, create
new opportunities, or render existing products or services obsolete. Organizations need to stay
abreast of technological trends, innovations, and developments to remain competitive. This
includes factors such as automation, digitalization, artificial intelligence, data analytics, and
emerging technologies that could impact business processes, product offerings, and customer
experiences.

Legal Factors

Legal factors encompass laws, regulations, and legal frameworks that govern business activities.
Compliance with legal requirements is essential for organizations to avoid penalties, lawsuits,
and reputational damage. Legal factors can include employment laws, consumer protection
regulations, health and safety standards, intellectual property rights, and industry-specific
regulations.

Environmental Factors

Environmental factors relate to ecological and environmental considerations that can affect
business operations and sustainability. Organizations are increasingly under pressure to adopt
environmentally friendly practices, reduce carbon footprints, and minimize negative impacts on
the environment. Environmental factors include climate change, pollution levels, resource
depletion, waste management regulations, and sustainability initiatives.

SCENARIO PLANNING AS A STRATEGIC ANALYSIS TOOL

Scenario planning is a strategic analysis tool used by organizations to anticipate and prepare for
different future scenarios that could impact their operations, objectives, and environment. Unlike
traditional forecasting methods that rely on predicting a single future outcome, scenario planning
considers multiple plausible scenarios, each with its own set of assumptions, uncertainties, and
implications

Scenario planning serves as a valuable tool for strategic analysis by enabling organizations to
explore alternative futures, anticipate potential challenges and opportunities, and develop
proactive strategies that enhance their resilience and agility in an uncertain world. By embracing
uncertainty and considering a range of possible outcomes, organizations can make more
informed decisions and improve their ability to navigate complexity and change.

Operationalization of scenario planning as a tool of strategic analysis

Identifying Key Uncertainties

Scenario planning begins by identifying the key uncertainties or driving forces that could shape
the organization's future environment. These uncertainties could be related to political,
economic, social, technological, environmental, or other factors that are difficult to predict with
certainty.

Developing Alternative Scenarios

Based on the identified uncertainties, scenario planners create a set of alternative scenarios or
narratives describing different possible futures. Each scenario represents a distinct combination
of critical uncertainties and reflects a plausible but divergent future outcome. These scenarios are
typically developed through a combination of research, expert judgment, and stakeholder input.

Exploring Implications

Once the scenarios are developed, organizations analyze the potential implications of each
scenario on their strategies, operations, markets, and stakeholders. This involves assessing how
each scenario could affect factors such as demand, competition, regulatory environment,
technology adoption, and customer behavior.

Identifying Strategic Options

Scenario planning helps organizations identify strategic options and responses that would be
appropriate under each scenario. By considering a range of possible futures, organizations can
develop more robust and flexible strategies that are better equipped to adapt to changing
conditions. This may involve identifying opportunities to capitalize on favorable scenarios,
mitigating risks associated with unfavorable scenarios, or developing contingency plans to
respond effectively to unexpected events.

Monitoring and Adaptation

Scenario planning is an iterative process that requires ongoing monitoring and adaptation. As
new information becomes available and the external environment evolves, organizations reassess
their scenarios, update their strategies, and refine their plans accordingly. This adaptive approach
enables organizations to stay ahead of emerging trends, seize opportunities, and mitigate risks in
a dynamic and uncertain environment.
PORTERS FIVE FORCES AS A TOOL

Porter's Five Forces is a framework for analyzing the competitive forces that shape an industry
and influence the attractiveness of entering or remaining in that industry. Developed by Harvard
Business School professor Michael Porter, this model helps organizations understand the
competitive dynamics within their industry and formulate strategies to gain a competitive
advantage.

By analyzing these five forces, organizations can gain insights into the competitive dynamics of
their industry, identify potential threats and opportunities, and develop strategies to enhance their
competitive position. The goal is to leverage strengths, mitigate weaknesses, and position the
organization to succeed in its industry despite the competitive pressures.

THE FORCES INCLUDES

Threat of New Entrants

This force examines the ease or difficulty of new competitors entering the industry. Factors such
as barriers to entry, economies of scale, capital requirements, access to distribution channels,
government regulations, and brand loyalty can all impact the threat of new entrants. High
barriers to entry typically result in lower threat from new competitors, while low barriers to entry
increase the likelihood of new entrants and intensify competition.

Bargaining Power of Buyers

This force assesses the power that buyers (customers) have over the industry. Factors such as the
number of buyers, their purchasing volumes, the availability of substitute products, and the
importance of the buyer to the industry can influence their bargaining power. When buyers have
high bargaining power, they can demand lower prices, higher quality, or better terms, which can
erode industry profitability.

Bargaining Power of Suppliers

This force examines the power that suppliers have over the industry. Factors such as the number
of suppliers, the uniqueness of their products or services, the availability of substitutes, and the
importance of the supplier to the industry can affect their bargaining power. When suppliers have
high bargaining power, they can exert pressure on industry participants by raising prices,
reducing quality, or limiting supply.

Threat of Substitute Products or Services

This force evaluates the extent to which alternative products or services outside the industry can
meet the same needs or offer similar benefits to customers. Factors such as the availability of
substitutes, their quality, performance, and price relative to the industry's offerings determine the
threat of substitutes. Industries with a high threat of substitutes face increased competition and
pricing pressure.

Intensity of Competitive Rivalry

This force examines the level of competition among existing firms within the industry. Factors
such as the number and size of competitors, industry growth rates, differentiation among
products or services, and exit barriers influence the intensity of rivalry. High levels of
competition often lead to price wars, reduced profitability, and increased pressure to differentiate
or innovated