Strategic analysis: Definition, types and benefits

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What is strategic analysis?

Strategic analysis refers to an evaluation of an organization’s work environment. This work environment generally defines how the organization operates its business. strategic analysis helps two determine this mood functioning of the organization and weather goals and objectives set by the organization can be met.

Strategic analysis is advised by many experts in an organization to be conducted from time to time through which the working of an organization can be determined and the areas after business that need changes and enhancements can be pointed out. 

Most of the ever growing organizations implemented use of strategic planning through various phases of their business. Strategic planning in the long term which has a systematic strategy end appropriate resource investment can help you as an organization to reach your goal.

One of the main characteristics of strategic analysis is that it makes you consider your competitors and helps you evaluate your business strategies in a way that will keep you on top of the race.

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Two types of strategic analysis

Internal strategic analysis

As the name suggests, internal strategic analysis is conducted when an organization needs to take a look inside itself and define the positive and negative performances which can be further improved with a proper set of resource investments. Doing so will enhance the company’s image in the market. internal strategic analysis focuses mainly on the organization’s performance by evaluating the potential organization to reach its goals. 

The most famous and commonly used internal strategic analysis technique is SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. This technique basically checks the full factors inside of an organization or its projects and determines how things may suffer.

Let’s take a look at four factors of SWOT analysis:

  • Strengths – strengths of an organization are the positive areas that help it to grow consistently. These are the areas in an organization that needs to be protected and carried forward through all the changes.
  • Weaknesses – where there are strengths there are also weaknesses. These are the areas of an organization that need to be fixed so that they can benefit the company while giving a competitive edge over its competitors.
  • Threats – there are various factors that affect an organization, but they are mostly predictable too. with a proper risk management strategy, threats like competitors’ better performance do not affect the organization’s performance.
  • Opportunities – determine the opportunities and organization has to grow along with every step towards its success. Identify external opportunities and make sure do you use them to the fullest.

External strategic analysis

Once the internal strategic analysis is completed and the organization is foolproof from the inside, it is time to evaluate the external factors that might be interrupting the organization’s growth. External strategic analysis to be accurate, one needs to know how the market works and how customers are affected by certain marketing strategies, products and services that the competitors present out there.

PESTLE analysis is the commonly used external strategic analysis technique. It stands for political, economic, social, legal and environmental analysis which determines the factors that affect the environment based on external strategic analysis.

It is a model that  helps you to:

  • point out these factors that an organization cannot control, like political changes or environmental changes.
  • Determine how each issue can impact the organization’s growth.
  • Identify the issues to the organization.
  • Measured the probability of that issue happening.
  • Make sure to consider the issue, if it ever occurred.

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Advantages of strategic analysis

  • Strategic analysis helps you to determine the internal positive areas in an organization that actively helps set it to grow. 
  • It also indicates that these positive areas should be protected and run consistently for the organization to be leading in the right part of success.
  • Strategic analysis drives out both the internal and external strengths and weaknesses that affect the organization’s growth.
  • It helps you identify the internal aspects of the organization that adds to its business advancements and use them as competitive advantages over your competitors.

Disadvantages of strategic analysis

  • Strategic analysis helps you get too many creative ideas but it does not tell you exactly which one to choose.
  • Strategic analysis sometimes can be very time-consuming which will affect other productive innovations like developing a new product or services at an organization level.

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