{"id":626,"date":"2019-06-25T20:57:12","date_gmt":"2019-06-26T00:57:12","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/businessessentials\/chapter\/the-role-of-strategic-analysis-in-formulating-a-strategy\/"},"modified":"2022-05-26T15:01:42","modified_gmt":"2022-05-26T19:01:42","slug":"the-role-of-strategic-analysis-in-formulating-a-strategy","status":"publish","type":"chapter","link":"https:\/\/pressbooks.bccampus.ca\/businessessentials\/chapter\/the-role-of-strategic-analysis-in-formulating-a-strategy\/","title":{"raw":"3.3 The Role of Strategic Analysis in Formulating a Strategy","rendered":"3.3 The Role of Strategic Analysis in Formulating a Strategy"},"content":{"raw":"

Strategic Analysis and Strategy Formulation<\/h2>\r\n

In the previous chapter, you read about the various levels of analysis that a manager carries out in order to understand their firm\u2019s competitive environment. A strategic analysis<\/span> of a firm\u2019s external environment (the world, competitors) and internal environment (firm capabilities and resources) gives its managers a clear picture of what they have to work with and also what needs to be addressed when developing a plan for the firm\u2019s success. Analysis comes early in the strategic process because the information a manager gets from the analysis informs the decision-making that follows. The information is so critical that entrepreneurs writing business plans (before the business even exists) do this analysis to understand if their business idea is feasible, and to understand how to position their business relative to existing competitors or potential customers in order to maximize their odds of success. (Figure)<\/a><\/strong> outlines just a few of the questions that strategic analysis tools can help answer.<\/p>\r\n\r\n

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Some Questions That Strategic Analysis Should Answer<\/div>\r\n\"A\r\n\r\n<\/div>\r\n

As an example of how the strategic tools help inform decisions, look back at the Walt Disney mission and vision in (Figure)<\/a><\/strong>. Imagine if you were Mr. Walt Disney today, and you wanted to start a company with a vision of making people happy in the 21st century. What products or services would you plan to offer? A PESTEL analysis would tell you that technology is an important part of entertainment and that sociocultural trends include people\u2019s preference for on-demand entertainment, to be convenient and compatible with their busy schedules. Disney\u2019s mission statement is broad enough about products and services to include a wide variety of offerings (they are thinking about the future too!), but if you were starting this company today, where would you start? Would you make movies for movie theaters, or develop a way to offer video entertainment online? Would you make console video games or phone apps? Who would your competition be, and what do they offer? How could you offer something better or cheaper?<\/p>\r\n

Managers learn about the conditions that their business will have to operate in by doing strategic analysis, and understanding those conditions is required in order to develop the plans and actions that will lead to success.<\/p>\r\n\r\n

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Exercises<\/p>\r\n\r\n<\/header>\r\n

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  1. What strategic analysis tools from the previous chapter would a manager use when planning a strategy for an existing business? What tools would be most helpful for a start-up business?<\/li>\r\n \t
  2. What actions can help a firm grow?<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>\r\n
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    Key Takeaways<\/p>\r\n\r\n<\/header>\r\n

    \r\n\r\nWhy is strategic analysis important to strategy formulation?\r\n