What is Strategic Analysis?

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How does one assess a business strategy? We define strategic analysis as the assessment of an organization’s current competitive position and the identification of valuable competitive positions in the future and how to achieve them. 

First, strategic analysis is done from a generalist perspective. By this I mean, we cross the functional boundaries of the business, which include marketing, finance, operations, and human resources. We bring those together in an integrative fashion when trying to understand a business strategy.

 Furthermore, strategic analysis in my opinion is foundational. And by that I mean we reference first principles primarily coming from economics, but from other disciplines as well. And that strategy ultimately serves as the base by which other activities of the organization flow out of. So if you are coming up with a capital budgeting plan for the organization or a marketing plan, those should be based on the overall strategic plan you have for the organization. 

Second, we’re going to do so by emphasizing this idea of strategic reasoning. We need to think about strategy in the context of the larger market and the larger competitive market that a firm operates in. Apple for example was able to introduce the iPod, but did so actually many years after the first introduction of a digital music player. Somewhat lost to history has been the idea that there were many rivals to Apple in this space long before Apple actually introduced their product. 

Third, our analysis needs to be grounded in analytics and data. Setting the conditions that permit you to gather data over the short and long run is crucial for decision making.

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