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Strategic Position Audit

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I. Strategic Position Audit

 

  1.1 The Need and Purpose of Strategic Business Analysis

       

     Strategic Business Analysis

           

- It is about understanding how your organization functions to fulfill its purposes. It entails defining the abilities, the firm needs to provide products to the external stakeholders. How the organizational goals connect to specific objectives also to make detailed plan to help achieve the goals and objective.

           - a practice that helps facilitate change in an organization by defining business needs (problem or opportunities) in collaboration with its stakeholders through strategy analysis and requirement engineering

     The Need for Strategic Business Analysis

       

 1. To get an overview of the current state of your company.

 2. Identify a company's positioning in relation to its competitors.

 3. Explore the key success factors and potential risk that will affect business performance.

     

    The Purpose of Strategic Business Analysis

       

1. Establish the issue or opportunity

                2. Understand the problem

                3. Facilitate Change

                4. To help the Business do better.

 

   1.2. Environmental Analysis: PESTEL Analysis

     

       PESTEL Analysis

 

- is a framework or tool use to analyze and monitor the macro-environmental factors that may have a profound impact on an organizations performance.

- This tool is useful when starting a new business or entering foreign market. It is often use in collaboration with other analytical tools such as the Porter's Five Forces, Porter's Diamond and SWOT Analysis to give a clear understanding of a situation and related internal and external factors.

 - It is an acronym that stands for Political, Economic, Social, Technological, Environmental and Legal Factors.

Figure 1.2 PESTEL Analysis

[pic 1]

Political Factor

                This factor is all about how and to what degree a government intervenes in the economy or a certain industry. Basically all the influence that a government has on your business could be government policy, political stability or instability corruption, foreign trade policy, tax policy, labor laws, environmental law and trade restrictions.

Economic Factor

     Economic factors are the determinants of a certain economy's performance. Factors include economic growth, exchange rate, inflation rate, interest rates, disposable Income of consumer and unemployment rates. These factors may have a direct and indirect long term impact on a company since it affects the purchasing power of customer and could possible change of demand/supply model in an economy.

       

 Social Factor

     This dimension represents the demographic characteristics, norms, customs and values of the population within which the organization operates. These include population trends such as the population growth rate, age distribution, income distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes and cultural barriers.

Technological Factor

    These factors pertain to innovations in technology that may affect the operations of the industry and the market favorably or unfavorably.

This refers to technology incentives, the level of innovation, automation research and development activity, technological change and the amount of technological awareness that market possesses. These factors may influence decisions to enter or not enter certain industries, to launch or not launch certain products or to outsource production activities abroad.

         

        Environment Factor

             This factor has become important due to the increasing scarcity of raw materials, population targets and carbon footprint target sets by government. These include ecological and environmental aspects such as weather, climate, environmental offsets and climate change which may affect industries such as tourism, farming and agriculture.

 Legal Factor

    These factors may have some overlap with the political factors they include more specific laws such as discrimination laws, antitrust laws, employment laws, health and safety laws, consumer protection laws and copyright and patents.

It is clear that companies need to know what is and what is not legal in order to trade successfully and ethically.

  1.3 Porter’s Five Forces

        - is a framework that helps analyzing the level of competition within a certain industry. According to this, competitiveness does not only come from competitors. Rather, the state of competition in an industry depends on five basic forces: (a) threat of new entrants; (b) bargaining power of suppliers; (c) bargaining power of buyers; (d) threat of substitute products or services; and (e) existing industry rivalry.

Figure 1.3 Porter’s Five Forces

[pic 2]

A. Threat of new entrants

        New entrants in an industry bring new capacity and the desire to gain market share. The seriousness of the threat depends on the barrier to enter a certain industry, the higher these barriers to entry the smaller the threat for the existing players.  Examples of these barriers are: (1) Economies of scale; (2) high customer loyalty for existing brands; (3) large capital requirement; and (4) limited access to distribution channels

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