Critically Evaluate Two Approches Used During the Strategic Analysis Process

Topics: Strategic management, Management, Value chain Pages: 13 (3847 words) Published: March 5, 2013
1. Introduction

It is known that nowadays it is not enough to have an idea and money to start a business to run. Even harder is to develop already existing project. Currently, as practically in every industry there is a huge competition, so must be carry out a market analysis before proceeding to any movement. The analysis must be conducted in a fair manner and give to meaningful results that will take the right decision for the future. Many schools give a lot of methods of market analysis. In addition to the well-known SWAT and PEST analysis, there are many other approaches such as Value Chain Analysis, Porters Five forces, Core Competencies and Stakeholder Mapping that may be useful.

This work will present two approaches of strategic analysis process such as Value Chain Management and Potters Five Forces. Those two methods seem to be the most authoritative and covering the largest range methods. The information and conclusions drawn from them give a clear view of the situation in which the company is located and whether the plans for the future have any chance of entry into force and to bring relevant results.

The first section presents the method of analysis of the value chain, its advantages and disadvantages, and presented examples of its application in practice, as typified by several companies. In the next part in a similar manner presented the advantages and disadvantages of the Potters five forces, also supported by examples of application. Finally, a brief summary is presented.

2. Value Chain Analysis

Value Chain Analysis is one of the methods of analysis of the strategic potential of the company, which is a "resource approach", which sources of success the company is looking for in the company. Value chain on the one hand refers to the economic path and then to organizational theory and analysis of the internal value chain of the company. The internal value chain, in turn, consists of basic and auxiliary functions.

The concept of the value chain, popularized by Michael E. Porter of the residue mid-eighties, it has its methodological roots in two known ways to examine the problems of business management. The first is an analysis of L. Miles, is a method of rationalizing the technical and organizational systems. The second way is used by the consulting company McKinsey and Company's approach to market analysis projects, assuming that projects are certain sequences of actions. Porter understands the value of the amount that the buyer is willing to pay for it, which provides the supplier. The value is measured as the total income of the company. Position of the company relative to its competitors is based on the value. It is beneficial if the create value exceeds the costs that must be incurred to produce it (G. Johnson, K. Scholes, R. Whittington, 2010).

The second main idea is the concept of M. Porter boils down to saying that the competitive advantage that is established, it cannot be understood on the basis of performance of the company as a whole, but by examining the efficiency of different types of activities, which the organization undertakes, delivering to market own product or service. Competitive advantage is the result of a variety of activities carried out in the areas of design, production, marketing and in functions supporting them. Each of these activities can be shaped in a specific amount of costs, as well as create value. They all consist of the value chain. Therefore the value chain illustrates to add product value, starting from changes in the inputs of the system, by performing the necessary processing operations, to sales and after-sales services related to it (R. Pettinger, 2004).

By analysing the individual "cells" the value chain can be defined places that do not meet this condition. Allows the study of internal and external sources of competitive advantage and build a winning business strategy. Using the value chain model can be presented in a simplified manner the...
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