Strategic Analysis Tools

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Topic Gateway Series

Strategic Analysis Tools

Strategic Analysis Tools
Topic Gateway Series No. 34

Prepared by Jim Downey and Technical Information Service

1 October 2007

Topic Gateway Series

Strategic Analysis Tools

About Topic Gateways
Topic Gateways are intended as a refresher or introduction to topics of interest to CIMA members. They include a basic definition, a brief overview and a fuller explanation of practical application. Finally they signpost some further resources for detailed understanding and research. Topic Gateways are available electronically to CIMA Members only in the CPD Centre on the CIMA website, along with a number of electronic resources.

About the Technical Information Service
CIMA supports its members and students with its Technical Information Service (TIS) for their work and CPD needs. Our information specialists and accounting specialists work closely together to identify or create authoritative resources to help members resolve their work related information needs. Additionally, our accounting specialists can help CIMA members and students with the interpretation of guidance on financial reporting, financial management and performance management, as defined in the CIMA Official Terminology 2005 edition. CIMA members and students should sign into My CIMA to access these services and resources. The Chartered Institute of Management Accountants 26 Chapter Street London SW1P 4NP United Kingdom T. +44 (0)20 7663 5441 F. +44 (0)20 7663 5442 E. tis@cimaglobal.com www.cimaglobal.com

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Topic Gateway Series

Strategic Analysis Tools

Strategic analysis tools
Definition and concept
Strategic Analysis is: ‘… the process of conducting research on the business environment within which an organisation operates and on the organisation itself, in order to formulate strategy.’ BNET Business Dictionary ‘… a theoretically informed understanding of the environment in which an organisation is operating, together with an understanding of the organisation’s interaction with its environment in order to improve organisational efficiency and effectiveness by increasing the organisation’s capacity to deploy and redeploy its resources intelligently.’ Professor Les Worrall, Wolverhampton Business School Definitions of strategic analysis often differ, but the following attributes are commonly associated with it: 1. Identification and evaluation of data relevant to strategy formulation. 2. Definition of the external and internal environment to be analysed. 3. A range of analytical methods that can be employed in the analysis. Examples of analytical methods used in strategic analysis include: • • • • • • • SWOT analysis PEST analysis Porter’s five forces analysis four corner’s analysis value chain analysis early warning scans war gaming.

An overview of these strategic analysis tools will be provided in this topic gateway.

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Topic Gateway Series

Strategic Analysis Tools

Context
In the current CIMA syllabus, students will study and may be examined on strategic analysis tools as part of the Management Level Paper 5, Integrated Management. In addition, the tools are commonly used in many organisations for strategic decision making. It is therefore an advantage to develop good strategic analytical skills at an early stage.

Related concepts
Strategic planning; strategic management; business analysis; benchmarking; balanced scorecard; competitor analysis; CIMA Strategic Scorecard™.

Application
Analytical methods and tools are key to ensuring that consistency and an appropriate level of rigour is applied to the analysis. There are a number of important considerations to be aware of when using analytical tools: 1. The tool must help to answer the question that the organisation has asked. 2. The expected benefit of using the tool needs to be defined and it must be actionable. The more clearly the tool has been defined, the more likely the analysis will be successful. 3....
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