Strategic Analysis of Company Handbook

8/3/2019 Strategic Analysis of Company Handbook

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STRATEGIC ANALYSIS

WORKBOOK

Materials Prepared by:

Dr. Chris Peterson

Agricultural Economics

Michigan State University

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STRATEGIC ANALYSIS WORKBOOK

!

CONTENTS Page

Performance Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Internal Analysis

Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Strengths Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Weaknesses Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

External Analysis

Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Opportunities Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Threats Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Strategic Issues Synthesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

! GOAL OF SWOT ANALYSIS

SWOT = Strengths, Weaknesses, Opportunities, and Threats

To challenge your assumptions and beliefs about the world inside and outside

your firm in order to:

1. select reality-based desired accomplishments (vision, mission, and

objectives),

2. better develop or alter your business strategies,

3. set priorities for operational change,

4. improve your performance.


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PERFORMANCE ASSESSMENT

The strategic analysis process begins with assessing your level of performance in each of the

following areas. Performance can be low or high based on the current situation, comparison to

goals, trends for the future, or your firms level of satisfaction.

Customer Satisfaction B ability to attract and maintain customers.

Low Performance 1-----2-----3-----4-----5 High Performance

Evidence:

CompetitivenessB ability to do better than your competition.


Evidence:

ProductivityB ability to provide products/services efficiently and effectively based on internal

management processes.


Evidence:

Profitability B ability to attract resources based on level of return to key stakeholders.


Evidence:

Which performance concerns (if any) warrant strategic analysis and planning?

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INTERNAL ANALYSIS CHECKLIST

GOAL: TO DETERMINE A FIRM'S INTERNAL STRENGTHS AND WEAKNESSES

DIRECTIONS: For each item below, circle the number on the scale that best corresponds to your honestassessment of your firm's strength or weakness in the indicated area.

GREAT GREAT

WEAKNESS STRENGTH

I. MARKETING RESOURCES

1. Customer satisfaction with products/services 1-------2-------3-------4-------5

2. Ability to gain customers versus the competition 1-------2-------3-------4-------5

3. Knowledge of the market 1-------2-------3-------4-------5

4. Product/service line breadth and depth 1-------2-------3-------4-------5

5. Product/service quality in terms of function, 1-------2-------3-------4-------5

image, place, time, possession, ease of use

6. Advertizing and promotion activities 1-------2-------3-------4-------57. Product/service pricing 1-------2-------3-------4-------5

8. Facilities and methods used to sell to customers 1-------2-------3-------4-------5

9. Market share 1-------2-------3-------4-------5

II. FINANCIAL RESOURCES

1. Strong and recurring operating profits (PM*) 1-------2-------3-------4-------5

2. Efficient asset management (TAT*) 1-------2-------3-------4-------5

3. Strong and recurring return on investment (ROI*) 1-------2-------3-------4-------5

4. Proper balance of debt and equity (EM*) 1-------2-------3-------4-------5

5. Strong and recurring return on equity (ROE*) 1-------2-------3-------4-------5

6. Strong and recurring cash flow 1-------2-------3-------4-------5

7. Ready access to outside/new funds 1-------2-------3-------4-------5

8. Well managed customer credit 1-------2-------3-------4-------5

9. Well managed supplier credit 1-------2-------3-------4-------5

*Key financial ratios used to assess these areas.

III. HUMAN RESOURCES

1. Adequate number of people to do the work 1-------2-------3-------4-------5

2. Adequate quality of people to do the work 1-------2-------3-------4-------5

3. Personnel plans 1-------2-------3-------4-------5

4. Job design and descriptions 1-------2-------3-------4-------5

5. Performance standards and evaluation procedures 1-------2-------3-------4-------5

6. Training programs 1-------2-------3-------4-------57. Good morale as evidenced by absenteeism, 1-------2-------3-------4-------5

turnover, tardiness, complaints, bickering,

employee growth and development

8. Compensation system that promotes performance 1-------2-------3-------4-------5

and satisfaction

9. Equitable and competitive pay 1-------2-------3-------4-------5

10. Equitable and competitive fringes 1-------2-------3-------4-------5

11. Appropriate use of teams 1-------2-------3-------4-------5

12. Work ethic of individuals and teams 1-------2-------3-------4-------5


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GREAT GREAT

WEAKNESS STRENGTH

IV. OPERATIONS/PRODUCTION RESOURCES

1. Quality of needed facilities to serve customers 1-------2-------3-------4-------5

2. Capacity of needed facilities to serve customers 1-------2-------3-------4-------5

3. Up-to-date and appropriate technology 1-------2-------3-------4-------5(buildings, machinery, etc.)

4. Effective and efficient physical layout 1-------2-------3-------4-------5

5. Effective and efficient work flow 1-------2-------3-------4-------5

6. Effective and efficient inventory control 1-------2-------3-------4-------5

7. Effective and efficient purchasing practices 1-------2-------3-------4-------5

8. Effective and efficient production practices 1-------2-------3-------4-------5

V. MANAGEMENT/LEADERSHIP RESOURCES

1. Effective management style 1-------2-------3-------4-------5

2. Timely decision making 1-------2-------3-------4-------5

3. Effective delegation 1-------2-------3-------4-------54. Effective participation 1-------2-------3-------4-------5

5. Effective risk taking 1-------2-------3-------4-------5

6. Effective leadership 1-------2-------3-------4-------5

VI. ORGANIZATIONAL RESOURCES

1. Appropriate mix of resources (people, money, 1-------2-------3-------4-------5

equipment) available

2. Resources properly placed to do the job 1-------2-------3-------4-------5

3. Effective interdepartmental communications 1-------2-------3-------4-------5

4. Effective reporting relationships 1-------2-------3-------4-------5

5. Firm's public image 1-------2-------3-------4-------5

6. Strong organizational culture (productivity, 1-------2-------3-------4-------5honesty, dispute handling, tolerance of change)

VII. INFORMATION RESOURCES

1. Appropriate financial and cost accounting systems 1-------2-------3-------4-------5

2. Planning system appropriate for internal analysis 1-------2-------3-------4-------5

(assessing strengths and weaknesses)

3. Planning system appropriate for external analysis 1-------2-------3-------4-------5

(assessing opportunities and threats)

4. Control system that highlights problems and 1-------2-------3-------4-------5

generates corrective action

5. Information systems that use the best technology 1-------2-------3-------4-------5

available

6. Effective information for strategic decision making 1-------2-------3-------4-------5

7. Effective information for operational decision 1-------2-------3-------4-------5

making

8. Ability to utilize internet and e-commerce 1-------2-------3-------4-------5


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STRENGTHS ANALYSIS

ASSESS YOUR FIRM'S TEN MOST IMPORTANT STRENGTHS* USING THE QUESTIONS FROM

ABOVE AND YOUR OWN BELIEFS ABOUT YOUR FIRM. In the column marked CA put a check beside

those strengths that are COMPETITIVE ADVANTAGES.** In the final column, cite specific evidence thatsupports your believe that the item is a strength or competitive advantage.

STRENGTHS CA? EVIDENCE

* STRENGTH: Something a company does well or a characteristic that gives it an important

capability.

**COMPETITIVE ADVANTAGE: A strength that clearly places a firm ahead of its competition.


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WEAKNESSES ANALYSIS

ASSESS YOUR FIRM'S TEN MOST IMPORTANT WEAKNESSES* USING THE QUESTIONS FROM

ABOVE OR YOUR OWN BELIEFS ABOUT YOUR FIRM. In the column marked CD put a check beside

those weaknesses that are COMPETITIVE DISADVANTAGES.** In the final column, cite specific evidence

that supports your belief that the item is a weakness or competitive disadvantage.

WEAKNESSES CD? EVIDENCE

* WEAKNESS: Something a company does poorly or a characteristic that puts it at a disadvantage.

**COMPETITIVE DISADVANTAGE: A weakness that clearly places a firm behind its

competition.


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EXTERNAL ANALYSIS CHECKLIST

GOAL: TO DETERMINE A FIRM'S EXTERNAL OPPORTUNITIES AND THREATS

PORTER'S FIVE COMPETITIVE FORCES

DIRECTIONS: For each item below, circle the number on the scale that best corresponds to your honest

assessment of the external situation faced by your firm. Numbers to the left on the scales

correspond to situations with greater threats while numbers to the right correspond to

situations with greater opportunities.

1. POTENTIAL ENTRY:

How difficult is it for new firms to enter your

market?How many options exist for discouraging new

firms from entering your market?

Easy 1---2---3---4---5 Difficult

Few 1---2---3---4---5 Many

2. SUPPLIER POWER:

How much bargaining power do your suppliers

have?

How many options exit for lessening supplier

power?

Much 1---2---3---4---5 Little

Few 1---2---3---4---5 Many

3. BUYER POWER:

How much bargaining power do your buyers

have?

How many options exist for lessening buyer

power?

Much 1---2---3---4---5 Little

Few 1---2---3---4---5 Many

4. POTENTIAL SUBSTITUTES:

How many alternatives do buyers have for

getting the benefits of your products or services

in some other way?

How many options exist for improving your

price-performance tradeoff?

How many options exist for finding less

substitute-sensitive customers?

Many 1---2---3---4---5 Few

Few 1---2---3---4---5 Many

Few 1---2---3---4---5 Many

5. RIVALRY:What level of intensity exists in the rivalry

between you and your direct competitors?

How strong are these direct competitors?

How many options exist for taking on these

competitors head to head?

How many options exist for picking areas of the

market that are not so competitive?

High 1---2---3---4---5 Low

Strong 1---2---3---4---5 Weak

Few 1---2---3---4---5 Many

Few 1---2---3---4---5 Many


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THE CHANGE FORCES

DIRECTIONS: For each item below, circle the number on the scale that best corresponds to your honest

assessment of the external situation faced by your firm. Then, in the space provided, lis

specific key changes influencing your firm. Less change corresponds to less threatening

but probably fewer opportunities. Greater change corresponds to more threatening, bu

probably more opportunities.

1. Changes in buyer demand, i.e., what buyers

want and need. Consider changes in tastes,

lifestyles, customer income, preferences for

unique products/services, etc.

Little Change 1---2---3---4---5 Much ChangeLIST KEY CHANGES:

2. Changes in long-term market growth rate.

Consider changes in industry growth, population

growth, product/service attractiveness to

customers, market saturation, etc.


3. Product and marketing innovation. Consider

innovations in product/service features, quality,

packaging, promotion, advertising, distribution,

etc.


4. Technological change and the speed with

which it spreads. Consider changes in

equipment, production methods, biotechnology,

computers, information systems, and the speed

with which industry competitors or customers

adopt these changes.


5. Regulatory influences and government policy

changes. Consider changes in environmental,

business, and land-use laws and regulation.


6. Changes in uncertainty and business risk.

Consider changes in business liability, volatility

of markets, ability to forecast effectively, etc.


7. Major changes in the economy. Consider

changes in the levels of employment, investment,

interest rates, etc.


8. Increasing globalization of the industry.

Consider changes in imports, exports, global

competition, etc.



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OPPORTUNITIES ANALYSIS

ASSESS YOUR FIRM'S TEN MOST IMPORTANT OPPORTUNITIES* USING THE COMPETITIVE

AND CHANGE FORCES FROM ABOVE AND YOUR OWN BELIEFS ABOUT YOUR FIRM'S

EXTERNAL SITUATION. In the column marked evidence, site the primary reason(s) why you believe this is an

opportunity.

OPPORTUNITIES EVIDENCE

*OPPORTUNITY: Any external factor or situation that offers promise or potential for moving closer or

more quickly toward the firm's goals.


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THREATS ANALYSIS

ASSESS YOUR FIRM'S TEN MOST IMPORTANT THREATS* USING THE COMPETITIVE AND

CHANGE FORCES FROM ABOVE AND YOUR OWN BELIEFS ABOUT YOUR FIRM'S EXTERNALSITUATION. In the column marked evidence, site the primary reason(s) why you believe this is a threat.

THREATS EVIDENCE

*THREAT: Any external factor or situation that may limit, restrict, or impede the business in the

pursuit of its goals.


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STRATEGIC ISSUES SYNTHESIS

"The final analytical task is to home in on the strategic issues management needs to address in forming an effective

strategic action plan. Here, managers need to dr aw upon all the prior analysis, put the company's overall situation into

perspective, and get a lock on exactly where they need to focus their strategic attention." (Thompson and Strickland)

What are the firms core competencies? Key competitive advantages?

Where do the company's strengths and opportunities reinforce each other? Where do the company's

weaknesses and threats reinforce each other? To answer these interrelated questions, construct at least threescenarios or stories about the companys future. For each scenario, focus on the key uncertainties about

strengths, weaknesses, opportunities and threats.

1. DECLINE. What combination of external threats, unrealized opportunities, internal weaknesses, and

decreasing strengths could result in a substantial decline in performance?

2. SAME BUT BETTER. What combination of external opportunities and threats and internal strengths

and weaknesses could result in a gradual extension and enhancement of past performance?

3. FUNDAMENTAL CHANGE. What combination of realized opportunities, avoided threats, dramatic

enhancement of strengths, and correction of weaknesses could result in significant, discontinuous

improvement in performance?


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O

T

SW

Offense

DiversificationDefense

Turnaround

How much change is needed? In balance, should the firm be on offense

or defense? (Locate the companys relative position on the change grid to

the left.)

What are the critical strategic issues that must be addressed to assure a successful future? The critical

issues can be thought of as a series of "how will we. . . ?" questions that must be answered by the strategic

planning process. The strategic issue questions should be tailored to the company and not stated generically.

Try to keep to under 5 in order to assure focus on the truly critical issues.

1.

2.

3.

4.

5.

Documents

Strategic Analysis of Company Handbook