STRATEGIC ANALYSIS

STRATEGIC ANALYSIS
Strategy formulation is not a task in which managers can get by with intuition, opinions, instincts, and creative thinking. Judgments about what strategies to pursue need to flow directly from analysis of a firm’s external environment and its internal resources and capabilities. The two most important situational considerations are:

(1) industry and competitive conditions, and

(2) an organisation’s own competitive capabilities, resources, internal strengths, weaknesses, and market position.

The analytical sequence is from strategic appraisal of the external and internal situation, to evaluation of alternatives, to choice of strategy. Accurate diagnosis of the company’s situation is necessary for managerial preparation for deciding on a sound long-term direction, setting appropriate objectives, and crafting a winning strategy. Without perceptive understanding of the strategic aspects of a company’s external and internal environments, the chances are greatly increased that managers will finalise a strategic game plan that doesn’t fit the situation well, that holds little prospect for building competitive advantage, and that is unlikely to boost company performance.