Strategic Analysis is a process that analysis and researching about the business environment. Every business organization has to analyze the business environment strategically to formulate the strategic planning and policies for better decision making and efficient working of an organization. through proper implementation of strategies, an organization can fulfill all the goals and aims. For the continuous improvement of an organization, the regular analysis of strategies of an organization. The strategic analysis is of following types:
- Internal strategic analysis: In this analysis, management evaluates the internal operations and management of an organization that can affect it directly or indirectly. The analysis starts with the evaluation of the performance and capacity of an organization to grow. In this analysis, management evaluates the SWOT of the company which means strengths, weaknesses of an organization to grab the opportunity and face the threat imposed.
- External strategic analysis: Along with internal, the external analysis of the company is also necessary. All the factors that reside out of an organization but affects its operations directly or indirectly. The analysis of consumer behavior is most significant in relation to certain products or services. The most important tool of external analysis is PESTEL. Which is used to evaluate all the external factors of an organization that affects business operations. To evaluate all the factors of the analysis process, management has to follow simple steps which are as follows:
- Identify the key issues of an organization that is beyond the control.
- Evaluate the impact of identified issues.
- Determine the significance of these issues to an organization.
- Rate the probability of frequent occurrence of such identified issues.
- Consider the issues while taking significant decision making or formulating new policies or strategies of an organization.
Potential opportunities and Threats
An organization has to identify and evaluate the potential opportunities and threats of an organization that will provide scope to grow the scope of an organization and face the threats imposed. By identifying the opportunities and threats an organization can production firm can produce the tailored products to meet the needs of the market. Business opportunities can be evaluated in the following ways:
- The company must gather information from existing as well as potential customers in the form of market analysis research.
- Record the feedback of existing customers in regard to goods and services supplied.
- The management must evaluate the operations of competitors of an organization.
- The knowledge about potential opportunities can also be gathered by analyzing market trends.
The most common threats faced by a business organization are as follows:
- Property loss
- Business interruption
- Employee injuries
- Liability loss
- Breach of electric data of the company.
Environment variables which affect the business operations are as follows:
- Economic factors or indicators, which affects the financials of a business organization are as follows:
- Demand and Supply forces
- Marginal and Total Utility of the product and services supplied
- Money and Banking
- Economic growth and Development of the country
- Income and Employment level of the country
- General Price level of products and services supplied.
- Trade cycle
- Inflation rate
- Political factors are as follows:
- Government stability
- Level of interruptions by government.
- The business structure followed by the economy.
- Lifestyle of customers
- Buying habits of customers and potential customers
- Education level
- Religion and beliefs of customers
- Disposable income of the public
- Saving and investing habits of public
- Fashion trends
- Rate of participation in cultural events conducted by a community.
- Creativity of people
- Automation technology
- 3D technology
- Internet connectivity
- Wireless devices etc.
- Speed and power consumed by the technology
Cost of adopting new technology