A Framework for Comprehensive Strategic Analysis free essay sample

The logic of a comprehensive strategic analysis is simple: describe and explain the issue/problem, assess it, try to solve it. Of course, we actually analyze p roblems in a much more nonlinear manner than this in practice, but writing-up a n analysis in this linear, â€Å"rational† mode is the only way to make the analysis understandable to the client. Therefore, usually, a written comprehensive strategic analysis contains three major parts, in the following order: analysis of the current situation, assessment of the current situation (fulcrum) and solution analysis. Analysis of the Current Situation T he purpose of the current situation analysis is to provide a â€Å"snapshot† of the issue/problem and of the firm. Here some of the important questions normally addressed are: What is the issue/problem? Who owns and/or controls the firm? What has been the recent history of the firm? What business, or businesses, is the focal firm in? What are the focal firm’s products in each business? What are the customer segments in each business? What is the structure and dynamics of each industry that the firm competes and how competitive are they? What changes are taking place in the industry, or industries, that will affect the focal firm specifically and/or industry profitability over the next few 2 years? How does the firm compete at the product or business level? What are the firm’s internal sources of competitive advantage/disadvantage? What is the focal firm’s current strategy? How well is the firm performing from a financial perspective? Assessment of Current Situation (the Fulcrum) T he purpose of the fulcrum is to synthesize the current situation analysis nto an assessment of current and future expected performance. We will write a custom essay sample on A Framework for Comprehensive Strategic Analysis or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It should also consider the broad direction of a new strategic initiative, if the status quo is sub-optimal. The important questions here are: How well is the focal firm performing from a broad strategic perspective? Is the current strategy highly successful, successful, inadequate or disastrous? What is predicted to happen to overall performance if the existing strategy continues? If the strategy is not successful, what is the source, or sources, of the problem? In which broad strategic direction should the firm move? When dealing with these issues, the analyst also needs to think ahead: what type of choice method will be used to evaluate the strategic alternatives at the solution analysis stage? Solution Analysis I f the assessment suggests a change in, or refinement of, strategy, solution analysis lays out the strategic choices and a recommended strategy (and possibly an implementation analysis of the recommended strategy). The important questions here are: What are the potentially superior strategic alternatives? What should the firm’s strategic goals be? Are there goals apart from profit maximization that should be used to evaluate the strategic alternatives? How are the strategic alternatives projected to do in terms of firm goals? Which alternative is preferred? How sensitive is the choice between the alternatives to different scenarios or â€Å"states of the world†? Rationale for the Three-Part Strategic Analysis Framework Why three parts? Doing the major parts of strategic analysis is somewhat like trying to walk along a see-saw. Walking up one side of the see-saw is current situation analysis. Tipping the see-saw is assessment analysis (the ulcrum: this is usually the point where one is most likely to fall off! ). Walking down the other side is solution analysis. (We do not mean to imply that it is easy because it’s downhill. ) This metaphor conveys the idea that fulcrum assessment analysis is often the most difficult, and critical, part of strategic analysis. In practice, many analysts are often unwilling to pull 3 everything together and succinctly tell clients what the real problem is. Student-analysts especially, because they are not firm insiders, have a tendency to want to avoid answering this big, often unpleasant, question.