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The strategic analysis comprises the environmental analysis and business analysis and culminates in a SWOT analysis. The analyses form the basis for the strategy (analysis, formulation and development). A guideline (schema) for methodical implementation is presented here. All four topics are closely interrelated. The aim is to provide you with information on how they are carried out or how you can carry them out yourself.
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If you are my client, you will get a first overview of relevant topics here. Even if you are conducting an analysis for your own company, the guide (the schema) will help you. As a student, you will benefit from the methodical approach and the sources presented in the context of a thesis (term paper, bachelor thesis, master thesis).
First, you will be given an overview of the four sub-areas. Then, the practical implementation is discussed and a guideline (schema) is provided in a concise form.
The aim of an environmental analysis is to obtain an overview of the environment in which a company operates and to identify opportunities and risks. This is of great importance for forecasts, e.g. for a company valuation, but also for strategy development (formulation).
An environmental analysis includes in particular the global environment as well as the task and competitive environment and enables a systematic classification of relevant factors and is a component of the strategic analysis of a company.
The global environment, a part of the environmental analysis, can be subdivided into 1. an economic environment, 2. a political-legal environment, 3. a socio-cultural environment, 4. a knowledge-technological environment and 5. a natural environment. These five environments represent the essential components of the global environment.
Another sub-area of environmental analysis is the analysis of the task and competitive environment, which includes an analysis of the stakeholders, an industry structure analysis, an industry-internal analysis and a competition analysis.
The stakeholder analysis can be carried out with the help of five criteria (goals, power, legitimacy, urgency, risk) and presented as a stakeholder map. The stakeholder analysis is part of the task environment analysis.
The industry structure analysis, part of the competitive analysis, includes five sub-items, namely threat from new entrants, bargaining power of customers, bargaining power of suppliers, threat from substitution and rivalry among competitors.
The intra-industry analysis, part of the competitive analysis, is divided into two points, namely the earning power difference analysis and the analysis of the potential of strategic groups. The first point requires a competitor analysis and the second point an analysis of the global environment.
Competitor analysis is part of the analysis of a company’s competitive environment and aims to identify competitors, find out their objectives and strategy, and create a response profile, taking into account their assumptions and capabilities.
The aim of the business analysis is to get an overview of the company and to clearly identify strengths and weaknesses. This is highly relevant in the context of a business valuation or strategy development.
The business analysis is structured according to the functional approach or the value-added approach and is often oriented to the VRIO reference framework (value, rarity, imitability, organisation) and is also part of a strategic analysis.
The functional approach, part of the business analysis, can itself be divided into five kinds of resources. These are the analysis of financial resources, physical resources, human resources, organisational resources and technological resources.
The value-added approach, which is also part of the business analysis, is divided once into supporting activities and once into primary activities. Supporting activities overlay the primary activities cross-sectionally, i.e. they are part of the primary activities.
Supporting activities overlay so-called primary activities (value-added approach). They can be subdivided into four points, business infrastructure, human resources, technology development and procurement.
Primary activities can be divided into inbound logistics, operations (sales), marketing and distribution, outbound logistics and customer service and are part of the value-added approach. These are overlaid by the so-called supporting activities.
The aim of the SWOT analysis is to get an overview of the strengths, weaknesses, opportunities and threats. A SWOT analysis is helpful in the context of a company valuation and strategy development (formulation).
By combining the results of an environmental analysis (opportunities, threads) and a business analysis (strengths, weaknesses), a SWOT analysis, usually in matrix form, (strengths, weaknesses, opportunities, threats) can be created. The SWOT analysis provides a compact overview.
Positive environmental developments, derived from the environmental analysis, represent opportunities for the company. These should be exploited (‘exploitation of existing potentials’) if strengths are present, otherwise the potentials should be actively developed.
Negative environmental developments, derived from the environmental analysis, on the other hand, represent threats, which should be counteracted as early as possible. This is particularly relevant when risks and threats coincide.
Strengths refer to the potentials of a company where you are superior to your competitors, e.g. patents for certain technologies. Together with positive environmental development (opportunities), these should be developed and, in the case of negative environmental development, exploited.
Weaknesses, on the other hand, represent aspects of a company where there is a kind of insufficiency compared to the competitors. Weaknesses should be balanced out in the case of positive environmental development in order not to unnecessarily waste potential.
Often a SWOT analysis is done in the form of a matrix where opportunities and threats as well as strengths and weaknesses are presented in one of four fields. This is helpful to get an overview and serves especially for illustration.
The goal of strategy development (formulation) is to systematically develop (formulate) or analyse a strategy. In the context of internal planning processes, of a management consultancy, a strategy development (active) is of importance, while in the context of a company evaluation, the passive analysis of a strategy can also be relevant.
Strategy development (strategy formulation) can be subdivided into strategy at the corporate level, strategy at the business area level and strategy at functional area level. It is based on the results of the environmental and business analysis or its summary of the SWOT analysis.
At the corporate level, the international orientation and the form and timing of market entry can be examined first. Furthermore, the product/market positions, the possibility of exploiting synergy potentials and the determination of the desired company size are relevant.
In determining the desired company size, a classic distinction can be made between horizontal diversification, vertical diversification and conglomerate diversification. The latter is independent of the previous business area and serves in particular to diversify the risks of a company.
In the case of strategy at the business unit level, a distinction is made between cost leadership, differentiation and concentration on focal points (focusing), but these can also be combined to form so-called hybrid competitive strategies. A hybrid competitive strategy is created through temporal or spatial decoupling, although sometimes no decoupling takes place.
The environmental analysis, the business analysis, the SWOT analysis and the strategy development are often part of an internal planning process, a business consulting with a focus on strategy development or an M&A consulting. M&A consulting particularly takes place in the case of the acquisition, sale, merger or demerger of a company. These three components are interrelated and are often performed successively. It is recommended to project relevant factors.
Books about management sometimes contain more than a thousand pages. This makes it difficult to put either an environmental analysis, a business analysis, a SWOT analysis or a strategy development (or analysis) systematically into praxis. For this reason, I present a guideline with sources for deeper research. According to my scientific socialisation sources are either in German or English. The mentioned sources can often be accessed for free via academic institutions. This guide is written for those who already have a deeper understanding of the subject.
A reasonable approach is as follows:
A note on Jupyter Notebooks and APIs. A Jupyter Notebook is a kind of word processor in which you can also code. This is feasible even without in-depth knowledge, and it enables a much more efficient way of working. Through an API, data can be loaded directly into Jupyter Notebook using the programming languages Python, R or Julia, which facilitates working a lot. For example, the World Bank Indicators can be searched for the GDP indicator, and it can be loaded directly into a Jupyter Notebook.
The sources in the following schema apply to the item itself, or to one or more sub-items. In the following, the schema is presented.
(Hungenberg, 2014; Düfler & Jöstingmeier, 2008; Kutschker & Schmid, 2011; Gloede, 1991)
(Hofstede, 2001; Hofstede & Minkov, 2010)
keywords for demographics:
keywords for individual relations:
keywords for group relations:
keywords for temporal set of values:
keywords for objective set of values:
might be summed better up by the keywords (Hofstede):
keywords for thinking and language:
keywords for education:
keywords for technology:
keywords:
(Mitchell et al., 1997; Freeman et al., 2010)
keywords:
(Porter,1998; Scherm & Julmi, 2019)
keywords:
keyword for each subchapter in the functional and value-added approach vrio:
(Porter, 2004; Scherm & Julmi, 2019; Faix & Kupp, 2002)
keywords:
(Heenan & Perlmutter, 1979; Bartlett & Ghoshal, 1990; Gelbrich & Müller, 2011)
keywords orientation:
keywords classification:
keywords strategy:
(Meffert & Pues, 2002; Backhaus & Voeth, 2010; Kutschker & Schmid, 2011; Müller-Stewens & Lechner,
2002)
keywords for market entry:
keywords for market entry (time, country):
keywords:
keywords:
(Porter, 2004; Scherm & Julmi, 2019)
keywords:
(Fleck, 1995; Scherm & Julmi, 2019)
keywords:
keywords:
Backhaus, K. & Voeth, M. (2010). Internationales Marketing (6th ed.). Schäffer-Poeschel.
Bartlett, C. A. & Ghoshal, S. (1990). Internationale Unternehmensführung: Innovation, globale Effizienz, differenziertes Marketing. Campus Verlag.
Burr, W., Stephan, M. & Werkmeister, C. (2012). Unternehmensführung (2nd ed.). Vahlen.
Düfler, E. & Jöstingmeier, B. (2008). Internationales Management in unterschiedlichen Kulturbereichen (7th ed.). De Gruyter Oldenbourg.
Gelbrich, K. & Müller, S. (2011). Handbuch Internationales Management. Oldenbourg.
Gloede, D. (1991). Strategische Personalplanung in multinationalen Unternehmungen. Gabler.
Heenan, D. A. & Perlmutter, H. V. (1979). Multinational Organization Development: A Social Architectural Perspective. Addison Wesley Longman Publishing.
Hofer, C. W. & Schendel, D. (1978). Strategy Formulation: Analytical Concepts. West Publ.
Kutschker, M. & Schmid, S. (2011). Internationales Management (7th ed.). De Gruyter Oldenbourg.
Heribert Meffert & Clemens Pues (2002). Timingstrategien des internationalen Markteintritts. In K. Macharzina (Ed.), Handbuch Internationales Management: Grundlagen, Instrumente, Perspektiven (pp. 403–416). Gabler.
Günter Müller-Stewens & Christoph Lechner (2002). Unternehmensindividuelle und gastlandbezogene Einflußfaktoren der Markteintrittsform. In K. Macharzina (Ed.), Handbuch Internationales Management: Grundlagen, Instrumente, Perspektiven (pp. 381–402). Gabler.
Porter, M. E. (1997). Competitive Strategy. Measuring Business Excellence, 1(2), 12–17.
Porter, M. E.(1998). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.
Porter, M. E.(2004). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.
Scherm, E. & Julmi, C. (2019). Strategisches Management. De Gruyter Oldenbourg.
Welge, M. K., Al-Laham, A. & Eulerich, M. (2017). Strategisches Management (7th ed.). Springer.
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