This document provides an overview of strategic analysis. It begins by outlining the components of strategic management and analysis. It then discusses approaches to assessing strategy, including qualitative and quantitative assessments. Key indicators for strategic success are also presented. The document also covers analyzing a company's resources and competitive position using SWOT analysis. It defines strengths, weaknesses, opportunities, and threats. Additionally, it discusses core competencies, distinctive competencies, and how to determine the competitive value of resources. Finally, the document outlines organizational capability profiles and strategic advantage.

1. Chapter
3
Strategic Analysis
MANDEEP KAUR
HARSHIL SHAH
MONISH SHAH
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2. Chapter Roadmap
Analysing Company’s Resources &
Competitive Position
Core Competencies & Distinctive
Competitiveness
Organisational Capability Profile
Strategic Advantage Profile
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3. Strategic Management
 Strategic Management is the art and science of formulating,
implementing and evaluating cross-functional decisions that enable
an organization to achieve it’s objectives.
 Elements of Strategic Management:
 Strategic Analysis
 Strategic Choice
 Strategic Implementation
 Strategic Analysis is the investigation of the objective factors being
considered in the process of strategic choice.
Strategic Strategic Strategic
Analysis Choice Implementation
Evaluation Process
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4. PYRAMID OF STRATEGY
STRATEGY
PLANS
PROGRAMMES
PROJECTS
BUDGET
Policies, Procedures, Rules, Regulations, etc
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5. Approaches to Assess How Well
the Present Strategy Is Working
 Qualitative assessment –  Quantitative assessment –
What is the strategy? What are the results?
 Completeness  Is company achieving its
financial and strategic
 Internal consistency objectives?
 Rationale  Is company an above-
average industry
 Relevance performer?
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6. Key Indicators of How Well
the Strategy Is Working
 Trend in sales and market share
 Acquiring and/or retaining customers
 Trend in profit margins
 Trend in net profits, ROI
 Overall financial strength and credit ranking
 Efforts at continuous improvement activities
 Trend in stock price and stockholder value
 Image and reputation with customers
 Leadership role(s) – Technology, quality, e-commerce,
innovation, etc.
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7. Analysing Company’s Resources &
Competitive Position
 S W O T represents the first letter in
S trengths
W eaknesses
O pportunities
T hreats
 For a company’s strategy to be well-conceived, it must be
 Matched to its resource strengths and weaknesses
 Aimed at capturing its best market opportunities and
erecting defenses against external threats to its well-being
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8. Identifying Resource Strengths
and Competitive Capabilities
 A strength is something a firm does well or an attribute that
enhances its competitiveness
 Valuable competencies or know-how
 Valuable physical assets
 Valuable human assets
 Valuable organizational assets
 Valuable intangible assets
 Important competitive capabilities
 An attribute that places a company in a position of market
advantage
 Alliances or cooperative ventures with partners
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9. Identifying Resource Weaknesses
and Competitive Deficiencies
 A weakness is something a firm lacks, does poorly, or a
condition placing it at a disadvantage
 Resource weaknesses relate to
 Inferior or unproven skills, expertise, or intellectual
capital
 Lack of important physical, organizational, or intangible
assets
 Missing capabilities in key areas
Resource weaknesses and deficiencies
are competitive liabilities!
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10. Identifying a Company’s
Market Opportunities
 Opportunities most relevant to a company are those
offering:
 Good match with its financial and organizational resource
capabilities
 Best prospects for profitable & long-term growth
 Potential
for competitive
advantage
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11. Identifying External Threats
 Emergence of cheaper/better technologies
 Introduction of better products by rivals
 Entry of lower-cost foreign competitors
 Onerous regulations
 Rise in interest rates
 Potential of a hostile takeover
 Unfavorable demographic shifts
 Adverse shifts in foreign exchange rates
 Political upheaval in a country
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12. Role of SWOT Analysis in
Crafting a Better Strategy
 The most important part of S W O T analysis is not
developing the 4 lists of strengths, weaknesses,
opportunities, and threats, but rather
 Using the 4 lists to draw conclusions
about a company’s overall situation and
 Acting on the conclusions to
 Better match a company’s strategy to its
resource strengths and market opportunities,
 Correct the important weaknesses, and
 Defend against external threats
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13. Competencies vs. Core Competencies
vs. Distinctive Competencies
 A competence is the product of organizational learning
and experience and represents real proficiency in
performing an internal activity
A core competence is a well-performed
internal activity central (not peripheral or incidental)
to a company’s competitiveness and profitability
 A distinctive competence is a competitively valuable
activity a company performs better than its rivals
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14. Core Competencies -- A
Valuable Company Resource
 A competence becomes a core competence when the
well-performed activity is central to a company’s
competitiveness and profitability
 Often, a core competence results from collaboration
among different parts of a company
 Typically, core competencies reside in a company’s
people, not in assets on a balance sheet
 A core competence gives a company a potentially
valuable competitive capability and represents a definite
competitive asset
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15. Examples: Core Competencies
 Know-how in creating operating systems for cost
efficient supply chain management
 Speeding new/next-generation products to market
 Better after-sale service capability
 Skills in manufacturing a high quality product
 System to fill customer orders accurately and swiftly
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16. Distinctive Competence -- A
Competitively Superior Resource
 It’s a specific ability possessed by a particular
organization exclusively, or in a relatively large measure
 A distinctive competence is a competitively significant
activity that a company performs better than its
competitors
 A distinctive competence
 Represents a competitively valuable capability rivals do
not have
 Presents attractive potential for being a cornerstone of
strategy
 Can provide a competitive edge in the marketplace —
4-16 because it represents a competitively superior resource

17. Examples: Distinctive
Competencies
 Sharp Corporation
 Expertise in flat-panel display technology
 Toyota and Honda
 Low-cost, high-quality manufacturing capability and short
design-to-market cycles
 Intel
 Abilityto design and manufacture ever more powerful
microprocessors for PCs
 Wal-Mart
 Low-cost distribution and use of state-of-the-art retail
technology
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18. Determining the Competitive
Value of a Company Resource
 To qualify as competitively valuable or to be the basis for
sustainable competitive advantage, a “resource” must
pass 3 tests:
1. Should provide access to potential market….
2. Should contribute to the customer benefits of the end
product….
3. Should be difficult for the rivals to imitate….
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19. Organisational Capability Profile
 Organisational capability means the potential of the
company to use its strengths & to overcome its
weaknesses with a view to avail the opportunities
provided & face the threats posed by its external
enviornment.
 Organisational Capability Profile includes 3 factors:
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20. General Management
Factors
 It is concerned with the accomplishment of
organisational objectives by utilising physical, financial
& human resources.
 A Manager performs 5 basic functions:
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21. Planning
Suitable
Organisati
onal
structure
Optimum Right
Levels of People in
Control Right
Effective Places
Planning
Effective
Effective
Methods of
Leadership
Motivation
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22. Organising
 Means to an end.
 It is essential to carry out pre-determined course of action
 Organising includes:
 Giving a structure to a task
 Authority – Responsibility Relationship.
 Co-ordination
 Control
 Pressure to complete the desired objectives.
 Organising is a medium to complete tasks as per priority
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23. Directing
 It involves efforts directed towards achieving
organisational goals
 The basic function of management is:
 Motivating
 Commanding
 Leading
 Activating
 It deals with inducing the willingness & cooperation of
employees towards attaining the objectives
 It also enables a sense of coordination of activities
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24. Staffing
 Centered around human resource management.
 It includes:
 Job Design & Analysis
 HR Planning
 Recruitment & Selection
 Training & Development
 Performance Appraisal & Compensation
 Union Mgmt & Grievance Handling
 Maintaining records
 It is one of the most complicated task to handle.
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25. Controlling
 It includes all activities that are undertaken to ensure the
actual performance confirm to the planned performance
 The controlling activities include:
Establish performance standards
Measure actual performance
Compare actual performance to planned standards
Take corrective action
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26. Functional Management
Factors
 Functional competence refers to the strengths of the
organisation in the functional areas of management viz;
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27. Marketing Management
Customer
Analysis
Social
Responsibili Buying
ty
Opportunity
Selling
Analysis
Product &
Marketing
Service
Research
Planning
Price
Distribution
Planning
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28. Contd…
 Marketing System Audit
 Marketing Intelligence system
 Market & Sales Forecast
 Marketing Cost
 Marketing Productivity Audit
 Profitability
 Cost Reduction
 Marketing Function Audit
 Product – line & offerings
 Distribution
 Pricing
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29. Financial Management
Investment Financing
Decision Decision
Dividend
Decision
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30. Contd…
 Financial Checklist
 Liquidity
 Activity(Turnover)
 Profitability
 Growth
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31. Production & Operation
Management
 Managing the resources required to produce the products
or render services provided by the organisation.
 It reflects:
 Product Design
 Product Cost
 Production Efficiencies
 Production Process
 Inventory
 Work Force
 Product Quality
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32. Human Resource Management
 It is said that, the difference between two organisations in
term of competencies is due to the difference in the
capabilities of their Human Resources.
Human Resource
Department
HR Human Industrial
Employment Compensation
Development Relations Relations
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33. Research & Development
 It is concerned with:
 creationof knowledge;
 design of goods & services; &
 the operation of production process
 Survival & Development
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34. Value Chain Analysis
 It separates the activities of the firm into a sequential
chain.
 Michael Porter’s representation of the value chain
distinguishes between:
 Primary Activities (those involved with the transformation
of inputs and interface with the customer)
 Support Activities (those involved with other activities
which support the primary function of the organisation)
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35.  Support Activities
FIRM’S INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROFIT MARGIN
PROCUREMENT
I L O O L M S
N O P U O A
E
E R
B G T G R
R K
O I A B I E V
U S T O S T I
N T I U T I C
D I O N I N E
N D C G
C
 Primary Activities
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36. Strategic Advantage Profile
Strategic Advantage
Organisational Capability
Competencies
Synergistic Effects
Strengths & Weaknesses
Organisational Resources + Organisational Behaviour
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37. Strategic Advantage
 It is the outcome of organizational capabilities
 The rewards are in terms of financial parameters (eg. Profit,
shareholder value) or in terms on non-financial parameters
(eg. Market share, goodwill)
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