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There are multiple tools for strategy analysis. Also, different scholars have provided a different definition of strategy analysis. Simply the strategy analysis can be described as the process which is used for mapping, researching and facilitating an organization and to help the organization to reach its objectives. The strategy also emphasizes on the rectification of the faults in the operations of the organization. Strategy analysis can be of multiple types, and different organizations have adopted different techniques for their strategy analysis. Here are some of the most popular strategy analysis process, which are being used by the well-established organizations.

Porter’s Five Forces:

Porter’s five forces is a famous was of analyzing strategy of an organization. This theory emphasizes on the 5 important forces of an organization. These 5 forces of an organization provide a clear view of the strength and weakness of an organization. This model was initially introduced in the Michael Proter’s book, named as Competetive Strategy. The book was published in 1980. This book revealed the 5 important competitive features of any organization. It also says that one fault in any one of these features may ruin the organization completely. The 5 forces are:

(i) Competition in The Industry: This theory suggests that every organization must keep a close track on their competitions in the market. The organization should always compare their goods and services with their rival organizations. This comparison will help the organization to evaluate their goods and services. According to Teece, every organization should compare their goods and services with the rival organization, and this should be done prior to any cost-cutting process as well. constantly comparing with the rival group will help the organization to realize their strength and weakness.

(ii) Power of The Supplier: The number of suppliers in the market is an advantage. According to the book, every organization should choose their suppliers wisely. Choosing a bad quality supplier may ruin the business completely. Also, the availability of the raw material supplier is a big advantage. The number of raw material suppliers is available in the market; the producers will get the raw materials at a cheap price.

(iii) Power of Consumers: The consumer force is important for every organization. Every organization is directly or indirect is being driven by the consumer force. The consumers have the ability to decrease or increase the price of a certain good. Though it is entirely dependent on the value of every consumer and the number of the consumers.

(iv) Force of Substitute: Every product or service can be replaced by a substitute product. Organizations should keep a close track of all the substitutes of their goods or services and they should act according to the situation.

(v) Force of New Entry: Every industry is open to nature and any new organization can enter that particular sector. Organizations should be aware of the new entries. Though the number of new entries is not important. Consistency in the quality is the most important factor, and every organization should focus on this primary factor in order to exist in the market.

Example:

Bayerische Motoren Werke or Bavarian Motor Works in short BMW is considered as a leading automobile manufacturer. The example of this organization can be used to explain the five important market forces to analyze their business strategy.

Competition: The automobile industry is full of competitions and that keeps the automobile manufacturer under a lot of pressure.

Suppliers: BMW is a big organization and it has a very good reputation in the market. That is why getting good quality raw materials is not a concern for an organization like this.

Consumer force: If the organization fails to provide the consumers a feature loaded car at a competitive price point, then the consumers will opt for a different car. The force of consumer is quite high on automobile manufacturers like BMW.

Substitute force: There are a lot of substitutes available in the market. And because of the substitutes, this organization has to provide goods and services at a competitive price point.

New entry: The threat of a new entry is not a pressure for an organization like BMW. Because of its good reputation in the market has helped this organization to penetrate the market properly.

SWOT Analysis:

SWOT stands for strength, weakness, opportunities, and threats. This process helps to determine the strengths and weakness of an organization and prepare a plan for the future to improve the overall performance of the organization.

Strength:

1. Every organization must be aware of the quality of their goods and services, this emphasis on the good part of their goods and services.
2. Being aware of the key areas, where the organization is able to perform better than their rival companies.
3. Unique products and services of the organization.
4. The reason for the success of the organization.
5. USP (Unique Selling Proportion) of the organization.

As an example, the automobile manufacture Merced can be used. The automobile manufacturer should consider these 5 strengths to evaluate their business operations.

Weakness:

1. List of things, that needs to be avoided.
2. Areas for improvement.
3. Finding the reason for less number in sales.

The weakness of Mercedes is their pricing. According to market research, Mercedes cars are overpriced. Also, they only have cars of elder people, and they have fewer cars for the younger generation people. Mercedes should overcome their weakness to improve their sales.

Opportunities:

Every organization should focus on the latest trends and they should act according to that.

Mercedes has avoided the importance of hybrid cars, where the main rival organizations have understood the importance of the hybrid cars and all of them have launched hybrid cars 2 to 3 years ago.

Threats:

1. Too much competition in the market.
2. If the quality is falling in order to provide the goods and services at a competitive price.
3. Changing technology is a constant threat to large organizations.

Mercedes should take care of these threats, in order to conduct their business properly.

PESTLE Analysis:

This is the most commonly used method for analysis purpose. multiple organizations have adopted this method to evaluate their process of doing business. PESTEL stands for political, social, economic, legal, and ethics/environmental. These factors have a serious impact on every organization.

Political:    

If an organization doesn’t follow the rules and norms of the local government, it will not be able to conduct its business.

Economical:

If the organization doesn’t follow the tax-related rules and regulations, then it will never be able to conduct its business. also if the organization is unable to maintain its cash flow, then it will not be able to survive in the market.

Social:

The organization must contribute something to the society. The organization must produce environment-friendly products, in order to leave a positive impact on the society.

Technological:

The organization should adopt modern technologies to add efficiency in their business operations. Also, they should offer their consumers a better technology packed product or services to cope up with the competition.

Legal:

The organization should follow the rules and regulations of the government. Government policies can help an organization to increase its business. some strict rules and regulations may hamper the business operations of an organization.

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