The goal is to identify the major strategic issues facing a particular organisation at a given point in time, and then provide an analysis of those issues plus a synthesis proposing justified strategic responses (i.e. recommendations on the formulation and implementation of strategy that will enable the company to deal with the issue and achieve its objectives).
Table of contents
Strategic Profile and Case Analysis Purpose (Problem statement) State briefly the critical facts from the case that have affected the historical strategic direction and performance of the focal firm. The case facts should not be restated in the profile; rather, these comments should show how the critical facts lead to a particular focus for your analysis. This primary focus should be emphasized in this section's conclusion. In addition, this section should state important assumptions about case facts on which the analyses may be based.
General environmental analysis
A general starting place for completing a situation analysis is the general environment. General Environmental Analysis First, your analysis of the general environment should consider the effects of globalization on the focal firm and its industry. Following that evaluation, you should analyze general environmental trends. Table 4 lists a number of general environmental trends that, when studied, should yield valuable insights. Many of these issues are explained more fully in Chapter 2. These trends need to be evaluated for their impact on the focal firm's strategy and on the industry (or industries) in which it competes in the pursuit of strategic competitiveness.
Industry Analysis Once you analyze the general environmental trends, you should study their effect on the focal industry. Often the same environmental trend may have a significantly different impact on separate industries. Furthermore, the same trend may affect firms within the same industry differently. For instance, with deregulation of the airline industry, older, established airlines had a significant decrease in profitability, while many smaller airlines, with lower cost structures and greater flexibility, were able to aggressively enter new markets. Porter's five force model is a useful tool for analyzing the specific industry (see Chapter 2). Careful study of how the five competitive forces (i.e., supplier power, buyer power, potential entrants, substitute products, and rivalry among competitors) affect firm strategy is important. These forces may create threats or opportunities relative to the specific business-level strategies (i.e., differentiation, low cost, focus) being implemented. Often a strategic group's analysis reveals how different environmental trends are affecting industry competitors. Strategic group analysis is useful for understanding the industry's competitive structure and the profit possibilities within those structures.
Competitive environmental analysis
Firms also need to analyze each of their primary competitors. This analysis should identify competitors' current strategies, strategic intent, strategic mission, capabilities, core competencies, and a competitive response profile. This information is useful to the focal firm in formulating an appropriate strategy and in predicting competitors' probable responses. Sources that can be used to gather information about an industry and companies with whom the focal firm competes are listed in Appendix I. Included in this list is a wide range of publications, such as periodicals, newspapers, bibliographies, directories of companies, industry ratios, forecasts, rankings/ratings, and other valuable statistics. Internal Analysis Assessing a firm's strengths and weaknesses through a value chain analysis facilitates moving from the external environment to the internal environment. Analysis of the primary and support activities of the...
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