Perform a strategic analysis for your company with these 5 techniques

Evaluating the effectiveness of your business strategies is essential to ensure you are on the right track.

Bearing this in mind, we are going to explore here what a strategic analysis is and its importance, as well as the main techniques available.

Everyday running a business is full of big and small decisions. They are the ones that, little by little, will shape the path that the company will travel and will determine the level of success that can be achieved.

For them to be effective, since these decisions cannot be the result of purely intuitive thoughts or assumptions, it is essential to have an analytical basis to corroborate such actions. This is precisely where strategic analysis comes into play.

In this article we are going to show you a definition for the concept and explain why it is so important to apply it in your company.

In addition, we will introduce you to 5 different types of analysis, explaining when and how they should be applied. Take advantage of reading!

What is strategic analysis?

Strategic analysis refers to the study of the internal and external environment of a company, with the aim of evaluating its present and future components.

From it, it is possible to structure a scientifically based strategy, in order to facilitate the achievement of a certain goal, whether it is market growth, increased sales with Inside Sales, reduced costs with advertising, etc.

It is a way of investigating, analyzing and mapping the particularities present in the scope of an organization.

In this way, opportunities and areas that need improvement are easily visualized, as well as areas with satisfactory performance.

For a well done analysis, it is essential that the company establishes what it is and represents, as well as what it wants to represent. For this, the concepts of mission, vision and values ​​are widely used. Let’s understand them:

• mission: the fundamental purpose of a company;
• view: what she wants to achieve in the near future;
• values: the ethical and moral principles that the company undertakes to respect.

With those points well defined, there are several types of analysis that can serve the purpose of evaluating the company’s current approach and indicating possible alternatives.

We’re going to talk a little more about that throughout the text. First, let’s focus on the structural pattern of all strategic analysis.

How is the strategic analysis structured?

Analysis of the current strategic organization

Analyzing the strategic organization of a company is like going to the doctor. The first step is to look at internal and external agents and think about how they affect the health of the business.

Internal factors involve aspects such as operational inefficiency, lack of employee motivation and financial limitations.

External factors, in turn, may include political and economic trends, changes in consumer habits, and the entry of new competitors into the market.

Verdict on the efficiency of the current strategy

Once the external and internal conditions have been identified, it is time to examine how they are influencing the development of the company.

At that point, it is necessary to define the efficiency of the current strategy. This is achieved when the analyst asks the following questions:

• Is our approach being successful?
• Will the established goals be achieved?
• Are our strategies aligned with our mission, vision and values?

Formulation and implementation of alternative plans

If the answers to the questions presented in the last topic are negative, this is an indicator that the alternatives need to be made feasible.

So, it’s time to find and implement the most feasible changes with the most potential to cause a positive impact.

After that, the whole process is repeated. Strategic analysis is an activity that never stops, as it is always looking for flaws and gaps that present an opportunity for improvements to be made.

Why invest in a strategic analysis for your business?

Like any other investment, strategic analysis costs time and money for your business. Despite this, leaving it aside can be even more expensive.

Given this situation, this analysis should be seen as a fundamental element of the company, since it is a vital factor for success, as well as investing in Digital Marketing and Content Marketing today.

This is the only possible way to have accurate knowledge of the positive and negative attributes of the company’s internal environment. Having this type of data is essential to effectively understand what is working and replicate success in other areas of the business.

In addition, because it encompasses external factors and resources, strategic analysis is essential for generating competitive advantages. That way, you are always one step ahead of your competitors.

Finally, the investment allows to identify flaws in the operation. In other words, it is a way of discovering activities that are doing more harm than good. It is fair to say that, ultimately, investing in strategic analysis can be a lucrative activity.

What are the types of analysis that exist?

Throughout the text we mention that there are different approaches to conducting strategic analysis.

As much as your goal and modus operandi are similar, each one has different characteristics, and may be appropriate for one situation or another. To facilitate your understanding, we are going to explain 5 types.

SWOT Analysis or SWOT Matrix

Also known as “scope analysis”, it was developed by Stanford University in the 1970s. Its name is an acronym for the 4 elements that form the basis of SWOT:

• Ffortresses (strengths);
• EITHERopportunities (opportunities);
• Dweaknesses;
• Athreats;

Knowing the meaning of each letter, we can already understand how this strategy works, right?

This analyzes the positive and negative points of the operation of a business, both in the internal and external environment, separating them as follows:

• strengths: internal and external;
• opportunities: external and positive;
• weaknesses: internal and negative;
• threats: external and negative.

The SWOT analysis is simple to execute, which makes it an excellent option for small companies or those with less investment power, but it is also used by large corporations.

With it, the management body can anticipate and prepare for events that may affect the future of the company, something essential in times of digital transformation, in addition to correcting mistakes made internally.

PESTEL analysis

The PESTEL analysis, or PEST, is more used to monitor the macro environment of a company, that is, it is totally focused on its external factors. Just like the SWOT analysis, its name is made up of the initials of the factors used to evaluate the market of a business:

• Ppolitical (political);
• ANDconomic (economics);
• yesofficial;
• Technological (technological);
• ANDnviromental (environmental);
• Llegal.

Political factors pay attention to the actions and characteristics of the government that can influence the market, such as its stability, its political interests, laws and regulations.

Already the economic factors are related to the growth of the economy, inflation, purchasing power of the consuming public, etc.

Social elements are extremely important for marketing. They analyze consumer behavior and demographic information. As a result, they influence the way the brand understands and relates to the public.

As you have already been able to assimilate, the technological factors refer to the new technologies available and how they can affect the market.

The last two points, environmental and legal, were recently added to the analysis.

The first became essential from the moment that sustainability issues became so important for the business world.

Finally, legal factors are intended to keep the company on par with all laws and regulations that may affect its operations.

Porter’s 5 forces

Michael Eugene Porter is the renowned American academic who created one of the most widely used strategic analysis theories in the world: Porter’s 5 forces. This tool aims to identify the main competitive influence in a market.

The theory is based on the principle that, by knowing the power of the 5 forces, you can develop strategies to make your business more competitive. They are:

• rivalry between competitors;
• Bargaining power of suppliers;
• Bargaining power of customers;
• threat of new competitors;
• threat of new products and services.

According to Porter, the analysis of these 5 forces can determine the position of any company in the market in which it operates.

The selection of these elements, specifically, is based on the idea that these forces never change, contrary to more volatile factors such as technological changes or growth rates.

SOAR

Another name with an acronym. The free translation of the words that make up the name of this analysis would be forces, opportunities, aspirations and results.

SOAR is a particularly interesting type of analysis if your organization already has a defined strategic plan, but you want to concentrate efforts in a specific area.

The approach may be similar to SWOT, but there is a fundamental difference: SOAR does not pay attention to weaknesses and prefers to focus on building strengths.

Thus, this type of model is widely used to redirect efforts and resources to areas that are considered strong points, in order to strengthen them and make them more efficient.

Ansoff matrix

The Ansoff matrix, created in the 1950s by Igor Ansoff, has the objective of analyzing market characteristics and developing strategies to increase sales volume, either by creating new products or exploring new markets.

For such, the matrix presents 4 different approaches:

• market penetration: with a focus on increasing sales of existing products in an existing market;
• product development: seeks to introduce new products in an existing market;
• market development: focuses on entering a new market using existing products;
• diversification: seeks to enter new markets with the development of new products.

Therefore, the Ansoff matrix performs an analysis of its products and the market in which the company operates.

From there, it is possible to define the best action plan to increase the profit generated by sales.

Will it be to create new products or use existing ones after evaluating their life cycle? Looking for space in the current context or looking for new market niches?

The answers to those questions can have enormous value and potential to make your business successful.

Performing strategic analysis with some frequency is essential for the prosperity of a business. It is the only way to verify that it works and that it needs to be adjusted.

In this way, the business will avoid damage, will concentrate efforts in more needy areas and will have the possibility of competing on an equal footing with other companies in the market.

So, did you understand what strategic analysis is and what are the most important types?

How about continuing your studies with our Smart Goals template? Download it below!