Strategic Analysis: A Comprehensive Guide to Business Strategy

STAKEHOLDERS: groups or people who depend on an organization to achieve their own goals and on whom, in its turn, an organization depends. They can be affected by the goals, actions or behaviours of the firm. Types: Internal (shareholders, directors, managers, employees), External: clients, suppliers, financial institutions, competitors, government..). Some external stakeholders may try to influence the strategy through their relationship with internal stakeholders. POWER/INTEREST: Goals: describe and analyze the stakeholders that can affect firm's strategy, analyze the game of power, manage the power and behavior of stakeholders. Stages: describe stakeholders, asses the power of each stks and potential coalitions, describe the interest of each stks in each strategy, make specific proposals in order to manage stks interests. STAKEHOLDER MAPPING: Identifies stk expectations and power and helps in understanding poliical priorities. (C): they can be passive, but can arise a catastrophe situation if their interest are not valued, and they can move to D. (D): The fact that the strategies are accepted by they key players has a great importance. SOURCES OF POWER: Power is the ability of individuals or groups to persuade, induce or coerce others into following certain courses of action. Sources of power within organizations: hierarchy (autocration decision-making), influence (charismatic leadership), control of strategic resources, knowledge and skills (computer specialist), control of human environment (negotiation skills), involvement in strategy implementation. Sources of power for external stks: control of strategic resources (materials, labour, money), involvement in strategy implementation (distribution outlets), knowledge and skills (partners), through internal links (informal influence).

CORPORATE STRATEGY: Decisions that affect the comp. As a whole, specially the activity scope and the vehicles. Ansoffs growth matrix (directions): Market penetration (expansion): gain market share, it doesnt imply a change in activity scope, but it implies growth. Market Development (expansion): firms offer current products in new markets. It can be through an internalization, that it implies enlarging the firm's market to other countries, competing in a new context and adding new costs. The process of internalization is: national business-Sporadic exporting-Stable exporting through independent agents-Commercial subsidiaries-Industrial subsidiaries. Reasons to do an internalization: Push factors: threats in the home country that force the firm to find new markets abroad. Pull factors: opportunities in the destination countries that attract the firm to foreign markets. Facilitating factors: conditions that create a climate favourable to internalization. Diversification: combining new products and new markets developing new activities (therefore usually operating in new industries). It is very risky. Reason to do it: Search of synergies, finding new market opportunities, reducing global business risk, investing financial surplus, reinforce competitive position. RELATED DIVERSIFICATION: Adding new, but related products/services and markets; growth by developing new activities in different, but related industries. It has many different kinds of synergies, economies of scale, and also there are subtypes of related diversification: horizontal (subs or complementary products): development into activities which share similar customers, supply sources, etc. And vertical: development into activities concerned with company's inputs (backward integration) or outputs (forward integration). UNRELATED: Adding new, but unrelated products/services and markets; growth by developing new activities in different, unrelated industries. It offer new sources of profits (more profitable activities), extra-reduction in global business risk, financial and managerial synergies.

PORTER'S 5 FORCES: Helps identify the atractiveness of an industry in terms of 5 competitive forces. THREAT OF ENTRY: The threat of entry is low when the barriers to entry are high. Main barriers to entry: Economies of scale/high fixed costs, experience and learning, access to supply and distribution channels, differentation and market penetration costs, government restrictions (licensing, protection of patents..), loyalty of consumers/suppliers. Entrants must also consider the expected retaliation from organizations already in the market. T. SUBSTITUTES: Substitutes are products/services that offer a similar benefit to an industry's products/services, but by a different process. Customers will switch to alternatives (and thus the threat increases) if: The price-performance ratio of the substitute is superior (ex, aluminium may be expensive than steel but its more efficient for cars). The subs benefits from an innovation that improves customer satisfaction (high speed train can be quicker than airline from city center to city center). BP. BUYERS: Buyers are the organizations immediate customers, not necesaarily the final. If buyers are powerful, then they can demand cheap prices or product/service improvements to reduce profits. Buyer BP is high when: buyers are concentrates (ex of increased costs from farmers' fields to hypermarkets), buyers have low switching costs, buyers can supply their own inputs (backward vertical integration)(ex, of mercadona, or another ex is that a windown manufacturing company decided to manufacture their own glass). BP SUPPLIERS: Suppliers are those who supply what organizations need to produce the product/service. Supplier BP is high when: the suppliers are concentrated (few of them), suppliers provide a strange input, switching costs are high (its expensive to change suppliers), suppliers can integrate forwards (ex, low cost airlines have cut out the use of travel agents). Moreover, the BP of S increases when there are a lot of customers. RIVALRY BTWN COMPTRS: Competitive rivals are organizations with similar products and services aimed at the same customer group and are direct competitors in the same industry (distinc from subs). The degree of rivalry increase when: competitors are of roughly equal size, competitors are aggressive in seeking leadership, the market is mature, there are high fixed costs, the exit barriers are high, there is a low lvl of differentation.

 STRATEGIC GROUPS: are organizations within an industry/sector with similar characteristics, following similar strategies or competing on similar bases. These characts are diff from those in other strategic groups in the same industry/sector. The mobility barriers determine tge permeability between the different strategic groups and should be seen as access barriers specific for each strategic group. Uses of strategic groups: understanding competition, analysis of strategic opportunities, analysis of mobility barriers. Possibles competitive dimensions to chose: Geographical, numer products, size, quality, innovation... SCENARIOS: are detailed and plausible views of how the environment of an organization might develop in the future based on a key drivers of change about which there is a high lvl of uncertainty. Build on pestel, and an organization should develop 2-4 scenarios to analyse future strategic options. VALUE CHAIN: customer-supplier relationship succession among different sectors, necessary to ensure that the product/service reaches the final customer. It is useful for analyzing the diff value-adding activities of the company, and focusin on their inter-relationship. The goal is to find, describe and assess sources of CA. Links help to develop CA through coordination, and through optimization. The value chain analysis identifies the activities and their contribution to effieciency or differentation, analyzes links between activities, identifying activities that are strenghts and, therefore, sources of CA, identifying activities that are weaknesses. STRATEGIC BUSINESS UNITS: Homogeneous set of businesses from a strategic point of view. Set of activities for which it is possible to formulate a common strategy and at the same time diff from the strategy established for other activities and/or SBUs. Reasons to crate: Because of diff competitive position for each business in a firm with multiple businesses. Because of activity is developed in a particular competitive environment that requires specific capabilities. Because certain activities share success factors; therefore they share similar sources of CA, and grouping them facilitates the development of CA.