What Is a Strategic Analysis?

Esther Ejim

Strategic analysis refers to the process whereby a business owner or the management of an organization takes a deep look at the business model in relationship to the goals of the business and the performance of the business in comparison to others in related fields. This is geared toward the development of an effective plan or strategy for repositioning the business. Such a process must necessarily involve a study of the current performance of the business in juxtaposition to the possible future performance, an internal study of the business, and a study or analysis of external factors that may have an effect on the performance of the business.

Man climbing a rope
Man climbing a rope

The conduct of a performance analysis as a part of strategic analysis includes the assessment of the product or service that is the output of the company, a survey of the customers, and a study of the turnover within every business cycle. One of the foundations of successful businesses is a corporate goal or objective that the company hopes to achieve, maintain and even surpass in its quest for excellence in its field or industry. Such a goal gives the company a yardstick with which to measure its progress after stated periods in order to determine if the company is on the right path. Part of this process includes an analysis or the product of the company in order to find out how it is faring in terms of sales, acceptance and overall profitability. A study of the perception of the product among the consumers would include a survey of the target customers in order to find their views on the product as well as suggested areas of improvement.

While conducting an internal analysis as part of a strategic analysis, the company would have to check factors like its marketing processes and the management of its finances. This part of strategic analysis includes a study of the utilization of marketing resources, such as advertising and promotion, in order to create awareness and acceptance for the product. It would also include a study of the price structure in place with a view to finding out how this affects the bottom line of the company as well as the general sales. The company would have to analyze its human capital with a view to ensuring that the employees' needs are met and also that the level of productivity from the human resources is more than adequate. Another part of strategic analysis is the study of the external factors like the location of the business, the competition, and the ease of obtaining raw material and other supplies.

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