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Step 3: Analysis informs your Strategy

Key Points of this post:

PEST and SWOT two of the most common analysis tools can help you inform your strategy

There are limitations to analysis.

In order to begin any kind of strategy, crafted or planned, you have to understand where you are now!

  • Strategic analysis is a crucial part of long-term business planning and the first step in the planning process.

  • It is NOT tracking and analysis of operational data points.

  • Strategic analysis is a process. You gather data that helps you to decide on priorities and goals, shaping (or shifting) a long-term strategy for the business.

  • It gives you the ability to understand your environment, and formulate a strategic plan accordingly.

You’ll know you’re performing a strategic analysis if you are:

  • Honing in on high-level strategy. Focus only on information that directly impacts your long-term strategies and goals, not the operational activity of the company.

  • Looking backward and forward. Strategic analysis means reviewing data about what happened in the past, so you can determine the implications of that performance and predict what is likely to happen in the future.

  • Leaders are involved in the process. The leadership team needs to discuss, make decisions and take action based on the information.

There is no standard strategic analysis “format”. There are a number of methodologies available to help guide you through the process of collecting and analysing relevant data for strategy planning. Two of the most commonly used methods are SWOT and PEST(LE).

"Analysis is the critical starting point of strategic thinking" Kenichi Ohmae

PEST analysis looks at the Political, Economic, Social and Technological areas. Some people add LE to PEST to make PESTLE which includes environmental and legal to the analysis.

It focuses entirely on external factors of these areas that your organisation can’t control but should prepare for.

Such an analysis might call attention to things like changing funding, new technology, fluctuating interest rates, etc. Any change that might occur and would have a material impact on the organisation should be considered in your strategy planning.

SWOT which stands for strengths, weaknesses, opportunities, and threats.

This tool helps you identify where you are doing well and where you can improve, both from an internal and external perspective.

Strengths and weaknesses are considered internal factors.

Opportunities and threats are considered external factors.

Many organisations do both a SWOT and PESTLE analysis to get a complete picture of the business environment.

Discussions may include using data sets and experience to support view point. A team that is knowledgeable about both the company and industry will produce the most effective strategic analysis.

5 steps of a strategic analysis:

1. Determine the level of strategic analysis you’re performing.

2. Gather a team to help

3. Use one or more analytical methods to conduct your analysis

4. Summarise your findings and gain cohesion

5. Devise a formal Strategy based on the analysis

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