Strategic Analysis And Strategic Management

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Strategic Analysis And Strategic Management

10 Introduction

The purpose of this paper is to establish what strategic analysis is why we use it and when used correctly how it can benefit your organisation I will discuss the VRIO and PESTLE frameworks To attain an accurate portrait I will gather sufficient information from reliable sources and interpret this data to help answer the questions raised in an intellectually integrative manner

20 Objectives

The main objectives of this project are to

Explain why strategic analysis is necessary in organisations

Identify and explain what strategic analysis methodologies and tools are used to examine internal and external environments

Explain why strategic analysis is necessary in organisations

Breakdown and analyse the VRIO and PESTEL analysis tools

30 What is Strategic Analysis

Professor Worrall from the University of Wolverhampton Business School describes strategic analysis as a theoretically informed understanding of the environment in which an organisation is operating Worrell L1998

Understanding the organisations interaction with its internal and external environment will significantly improve an organisations effectiveness and efficiency by growth of the organisations ability to position and redistribute its resources logically

Strategic analysis is a critical component of the strategic planning process Strategic analysis is an integral part of a companys evaluation and control program as it provides managers with a comprehensive assessment of the organizations capabilities and market factors revealing growth opportunities and vulnerabilities Beany 2003

Definitions of strategic analysis often differ but Worrall states that the following attributes are commonly associated with strategic analysis

The Identification and assessment of information relevant to strategy design

Classification of the internal and external environment to be considered

The range of problem solving methods that can be employed in the analysis

Worrell L1998

31 Internal Analysis

The internal environment is the shape and fitness of the organisation Internal analysis tries to identify potential inhibitors that diminish organisational effectiveness such as resources An inhibitor is a mismatch between the structure or activities of the organisation and its direction

An example might be my smartphone As a resource it is more powerful than the original computer system on the space shuttle however I currently could not land the space shuttle with it So in this case I have a superior resource but an inferior capability

32 External Analysis

All organisations operate in a changing world and are subject to forces both internally and externally which are more powerful than they are No business can survive without continued interaction with the external environment organisations are influenced by forces in their external business environment

Any business strategy needs to take account of all these forces so that opportunities and threats can be identified and the organisation can navigate its way to success by matching its internal strengths to external opportunities

40 Strategic Analysis Tools

There are many strategic analysis and planning tools available to aid in strategically analysing the business environment internally and externally including the market environment as shown in Fig1

Fig 1

The following are just some of the tools available to analyse the business

PESTLE framework

SWOT framework

Scenario planning framework

VRIO framework

Critical success factor framework

Porters five forces framework

Four corners framework

Value chain analysis

War gaming analysis

Each tool has its benefits and restrictions and for the scope of this project I will examine PESTEL and VRIO frameworks in more depth

50 VRIO framework

Barney and Hesterly 2006 describes the VRIO framework as a worthy tool to examine the internal environment of an organisation VRIO is an acro

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