This stage entails looking at both the internal and external environments of the company. It also entails analysing the competitors in the market. This stage is always carried out after the mission and vision of the company have been identified. In simple terms, it involves looking at the current situation of the company. The strategic analysis of any business has the following stages:
- General environment
- Competitive environment
- Internal environment value creating
- Internal environment that is concerned with the resource-based view
- Assessing organisational performance
The general environment is a component of the business that involves looking at the external environment of business. The general environment has forces that are outside the business, which have the capability of affecting the business indirectly in certain ways. The major thing to be done by the business is to to evaluate the general environment.
The competitive environment is made up of the competitors. This is another environment that is external to the business and it is very difficult to control. A very good example of the effect of external competitor is when Apple Company produced it IPod. The production of IPod negatively affected the sales of mp3 players and other products produced by other companies, such as those from Sony. Businesses are supposed to look at the competitors and the challenges they pose to the business. Knowing the weaknesses and strengths of the competitors is always important.
This entails looking at the company. Value creating will purposefully involve observing the capabilities and core competencies of the company. These are factors that play a role in creating the value of products. Knowledge and skills of employees are the keys to business capabilities. Core competencies involve things that are crucial to the success of the business. It may involve doing the thing in a different way that the competitors cannot copy. Unique use of capabilities and resources can help the business to achieve its core competency that is necessary for creating value.
This will involve assessing the resources of the company. Organisations have both intangible and tangible resources. The intangible resources are made up of things like brand equity, patents, knowledge, trademarks, copyrights, and culture. The tangible resources are things, such as land, capital, and equipments. All these resources are required by the company for the effective function and to compete well in the market with the competitors.
Organisational performance entails looking at how well the organisation is performing in the market and how it is operating so as to attain its goal, mission, and vision. Assessing organisational performance is an important element of strategic management. This process should be carried out by the executives of the company. The performance of the business is a concept that is very complex, but the management has to find appropriate ways of assessing it.