What forces beyond competition shape my industry? Where can I find a position amongst my competitors that is profitable and difficult to replicate? With the answer to the above questions, you'll be able to start drafting a strategy to ensure your organization can find a profitable position in the industry. The environment your organization operates in will heavily impact your organization's success. Basically, the premise of the analysis is to scan each of the elements above to understand the current status and how they can potentially impact your industry and, thus, your organization.
It gives extra focus to certain elements that may have a wide-ranging impact. So not every tool is appropriate for every organization. These 8 tools are our top picks for giving you a helping hand through your strategic analysis. They're by no means the whole spectrum. There are many other frameworks and tools out there that could be useful and provide value to your process.
Choose the tools that fit best with your approach to doing strategy. Hopefully, this post has brought some clarity to you and gives you a structure for when you're ready to complete your own internal analysis.
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Product Hub. Take the Cascade personality test. Share this post:. In this article, we'll cover: What is strategic analysis Why conducting a strategic analysis improves your strategy formulation A strategy formulation case study How to conduct a strategic analysis The core concepts of strategic analysis Strategic analysis tool examples How to choose the right strategic analysis tool What is strategic analysis Strategic Analysis is the process of researching and analyzing the environment an organization operates in, as well as the organization itself, to inform the strategy formulation process.
How to conduct a strategic analysis? Strategy is not a linear process. Strategic planning includes the strategic analysis process. The key components in strategic analysis: Understand the strategy level you're completing the analysis for Complete an Internal Analysis Complete an External Analysis Share Key Findings 1.
Understanding the Strategy Level you're Completing the Analysis for Strategy comes in different levels depending on where you are in an organization and your organization's size. The three strategy levels are: Corporate Strategy Business Strategy Functional Strategy If you're not sure which strategy level you're completing your strategy analysis for, read this post explaining each of the strategy levels.
Internal Analysis An internal analysis looks inwards at the organization and assesses the elements that make up the internal environment. Let's take a look at the steps involved in completing an internal analysis: Assessment of tools to use Research and collect information Analyze information Communicate key findings The first step of an internal analysis should be deciding on the tool or framework you will use to conduct the analysis.
External Analysis An external analysis looks at an organization's environment and how those factors currently impact or could impact the organization. The steps for conducting an external analysis are much the same as an internal analysis: Assessment of tools to use Research and collect information Analyze information Communicate key findings You'll want to use a tool such as PESTLE or Porter's 5 Forces to help you add some structure to your analysis.
Share Key Findings There is no such thing as overcommunication. Much like strategy, this information is useless if not shared with everyone. Strategic Analysis Tool Examples There is a wealth of strategic analysis tools at your disposal.
In this part, we'll show you 8 of the best strategic analysis tools out there. Gap Analysis The Gap Analysis is a great internal analysis tool that helps you identify the gaps in your organization, impeding your progress towards your objectives and vision.
Four Corners Analysis The Four Corners Analysis framework is another internal analysis tool that focuses on your organization's core competencies. It covers both the internal and external perspectives for business. Strategy Evaluation Generally, every company will have a previous strategy that needs to be taken into consideration during a strategic analysis.
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Our customers often do not have the resources to manufacture or source products themselves, yet still need a steady pipeline of differentiated, new products, to keep themselves ahead of the competition. They also need speed to market. Once you have those in place, you plan initiatives around those results. After you've figured out those reference points, you determine the most appropriate metrics for measuring their success. For instance, your goal might be developing relationships with new targets or named accounts in a specific region.
If you only were able to develop 95, you would have a score of. Here's an example of what an OKR model might look like:. Image Source: Perdoo. The OKR model is relatively straightforward and near-universally applicable. If your business is interested in a way to work towards firmly established, readily visible standards this model could work for you. Let's consider a hypothetical company that makes educational curriculum and schedule planning for higher-education institutions.
The company decides it would like to expand its presence in the community college system in California — something that constitutes an objective. But what will it take to accomplish that? And how will the company know if it's successful? Well, in this instance, leadership at the business would get there by establishing three to five results they would like to see.
Those could be:. Those results would lead to initiatives like setting standards for lead qualification and training reps at the top of the funnel on how to use them appropriately, revamping sales messaging for discovery calls, and conducting research to better tailor the demo process to the needs of community colleges.
Leveraging this model generally entails repeating that process between two and four more times — ultimately leading to a sizable crop of thorough, actionable, ambitious, measurable, realistic plans. The Theory of Change TOC model revolves around organizations establishing long-term goals and essentially "working backward" to accomplish them. When leveraging the strategy, you start by setting a larger, big-picture goal.
Then, you identify the intermediate-term adjustments and plans you need to make to achieve your desired outcome. Finally, you work down a level and plan the various short-term changes you need to make to realize the intermediate ones. More specifically, you need to take these strides:. Image Source: Wageningen University and Research.
This planning model works best for organizations interested in taking on endeavors like building a team, planning an initiative, or developing an action plan. It's distinct from other models in its ability to help you differentiate between desired and actual outcomes.
It also makes stakeholders more actively involved in the planning process by making them model exactly what they want out of a project. It relies on more pointed detail than similar models. Stakeholders generally need to lay out several specifics, including information related to the company's target population, how success will be identified, and a definitive timeline for every action and intervention planned.
Again, virtually any organization — be it public, corporate, nonprofit, or anything else — can get a lot out of this strategy model.
For the sake of this example, imagine a business that makes HR Payroll Software — one that's not doing too well as of late. Leadership at the company feels directionless. They think it's time to buckle down and put some firm plans in motion, but as of right now, they have some big picture outcomes in mind for the company without a feel for how they're going to get there.
In this case, the business might benefit from leveraging the Theory of Change model. Let's say its ultimate goal is to expand its market share. Leadership would then consider the preconditions that would ultimately lead to that goal and why they're relevant. For instance, one of those preconditions might be tapping into a new customer base without alienating its current one. The company could make an assumption like, "We currently cater to mid-size businesses almost exclusively, and we lack the resources to expand up-market to enterprise-level prospects.
We need to find a way to more effectively appeal to small businesses. Now, the company can start looking into the specific initiatives it can take to remedy its overarching problem. Let's say it only sells its product at a fixed price point — one that suits midsize businesses much more than smaller ones. So the company decides that it should leverage a tiered pricing structure that offers a limited suite of features at a price that small businesses and startups can afford.
The factors the company elects to use as reference points for the plan's success are customer retention and new user acquisition. Once those have been established, leadership would explain why the goals, plans, and metrics it has outlined make sense. If you track the process I've just plotted, you'll see the Theory of Change in motion — it starts with a big-picture goal and works its way down to specific initiatives and ways to gauge their effectiveness.
The Hoshin Planning model is a process that aims to reduce friction and inefficiency by promoting active and open communication throughout an organization. In this model, everyone within an organization — regardless of department or seniority — is made aware of the company's goals. Hoshin Planning rests on the notion that thorough communication creates cohesion, but that takes more than contributions from leadership. This model requires that results from every level be shared with management — from the shop floor up.
The ideal outcomes set according to this model are also conceived of by committee — to a certain extent. Hoshin Planning involves management hearing and considering feedback from subordinates to come up with reasonable, realistic, and mutually understood goals.
Image Source: i-nexus. The model is typically partitioned into seven steps: establishing a vision, developing breakthrough objectives, developing annual objectives, deploying annual objectives, implementing annual objectives, conducting monthly and quarterly reviews, and conducting an annual review. The first three steps are referred to as the "catchball process. That stage is what really separates Hoshin Planning from other models. For this example, let's imagine a company that manufactures commercial screen printing machines.
The business has seen success with smaller-scale, retail printing operations — but it's realized that selling almost exclusively to that market won't make for long-term, sustainable growth. Leadership at the company decides that it's interested in making an aggressive push to move up-market towards larger enterprise companies — but before they can establish that vision, they want to ensure that the entire company is willing and able to work with them to reach those goals.
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