SBA
STRATEGIC
BUSINESS ANALYSIS
By
Alvin C. Andulan
Instructor III
Batangas State University
ARASOF-Nasugbu
MODULE
1
Learning
Objectives
∙ To define strategic
business
analysis
∙ To know the extent of
strategic
business
analysis
∙ To understand the difference
traditional
business and
strategic
business
analysis
∙ To identify the advantages and
disadvantages
of strategic
business
analysis
Overview of Strategic Business Analysis
INTRODUCTION
Improvement is the one constant in any company. You need to keep improving your
organization. So, to educate yourself, you must periodically conduct strategic analysis.
This will then help your organization to plan ahead and determine which areas need
improvement.
What Is Strategic Business Analysis?
🠶 Strategic analysis refers to the process of conducting research on a company and its operating
environment to formulate a strategy. The definition of strategic analysis may differ from an academic or
business perspective, but the process involves several common factors:
1. Identifying and evaluating data relevant to the company’s strategy
2. Defining the internal and external environments to be analyzed
3. Using several analytic methods such as Porter’s five forces analysis, SWOT analysis, and value chain
analysis (corporatefinanceinstitute.com).
🠶 Strategic Business Analysis (aka Enterprise Analysis) encompasses all of the pre project work to
identify business problems, define business opportunities, develop a business case, and recommend
whether to initiate a project. (Hathaway, 2012)
🠶 Strategic business analysis- are those actions and decisions made by management while trying to
understand the impact of strategic events like: introduction or development of new product line, setting
up a factory in a new location, employing key staff, selecting organizational structure, investing in new
technology, managing risks, complying with relevant laws and regulations, implementing changes, etc.
🠶 Strategic business analysis is used to define, scope and prioritize initiatives. It is an essential
component of every project or change initiative to ensure outcomes align with the goals and objectives
the entire organization and its departments (Lannon).
🠶 While traditional business analysis deal with individual items, strategic business analysis look at
things from both corporate perspective and longer term view.
🠶 Strategic business analysis in modern day business is hard to separate from strategic management
and planning where management have to battle with the ever changing business environment. Strategic
business analysis depicts the role of strategy in business.
🠶 Strategic business analysis plays a central role in creating better business outcomes.
🠶 Strategic business analysis facilitates the creation of the guiding strategies that enable organizations
to move from strategy to execution.
🠶 The purpose of evaluating business investment decisions on a strategic basis is to meet the four most
important goal of a business. The four goals of a business are: (1) satisfying customer’s needs, (2)
keeping employees happy at their job, (3) complying with regulations, and (4) operating profitably.
🠶 A firm’s internal capabilities are analysed against external opportunities and threats with the aim of
optimally aligning a firm’s long term goal with short term decisions. In the word of Ansoff, strategic
business analyses help to keep organizations secure from surprises that characterises business
environment.
🠶 Businesses cannot afford to analyse matters that are important to its long-term survival in silos and
short-termism. By thinking of the effect of one variable on the other and also on the future operation of
the business activities, management would have an idea of what is likely to happen in the future.
🠶 The length of the term to be covered in the analysis depends on the nature and type of the business. A
technological company that specialise in fast-moving consumer goods (FMCG) will for example have a
planning and analysis time horizon of say 10 months while organizations that construct dams will have to
analyse into years in advance.
Characteristics Of Strategic Business Analysis
🠶 Long term in nature: for any business analysis to be strategic in nature, it must have a long term view.
When designing a balanced scorecard for example, management should think of the impact that each
target and objectives that is contained in the strategic map will do to the long run survival of the
company.
Every company wants to have a larger market share in any chosen industry, but care should be taken to
ensure that activities of managers now while trying to meet their target would not jeopardise the
organizational long term goals.
🠶 Focus on external events and activities: senior managers spend about 60% of their time gathering and
interpreting information from outside source which will significantly improve decision making process.
They interact with people and organizations outside the entity in order to achieve this goal.
🠶 Place more emphasis on qualitative matters: in as much as financial indicators play vital role in
shaping the fortune of a business entity, attention should also be given to those qualitative factors that an
establishment cannot afford to ignore, else, business failure will be imminent. A qualitative emphasis
means that detailed calculations and manipulation of figures are unnecessary. All that is needed is the big
picture.
Challenges Faced By Management In The Process Of Strategically Analyzing A Business 🠶 Identifying
organizational objectives and matching it with its environment
🠶 Identifying the need for change and initiate both the incremental and transformational change
🠶 Blending the conflicting needs of stakeholders in such a way that the knockoff effect on the business
will not be felt so much
🠶 Striking a balance between short term and long term concerns
Advantages And Disadvantages Of Strategic Business Analysis
🠶 Advantages
∙ Monitor and control progress through management accounting controls ∙ Makes management think in
advance
∙ Optimizes the use of scarce resources
∙ Optimizes the use of scarce resources
∙ Ensures consistency in the pursuit of goals and objectives
∙ Seamlessly make organization fit into its environment
∙ Guides the path of the business
🠶 Disadvantages
∙ Could be expensive in terms of time and money
∙ Could lead to bottleneck and bureaucracy
∙ Not so useful in managing crisis
∙ Blindfold management from identifying and taking opportunities as they arise
∙ A strategic business analysis would not be complete if a company does not understand the triangle of
strategy which: (a) strategic position, (b) Strategic choices, and (c) Strategic actions
9 Keen Focus Areas In Strategic Business Analysis
🠶 Understanding the business structure, architectures, and people and culture
🠶 Conducting capability analysis to ensure the organization can do what it says it plans to do
🠶 Ensuring proper strengths and weaknesses are recognized, and opportunity and threats are identified
and defined
🠶 Business problems and opportunities are analyzed, and solutions are brainstormed beyond the norm of
improving processes, increased sales and cut costs
🠶 Performing feasibility and risk analysis on the potential solutions and compare the solutions
alternatives through success and failure analysis, pros and cons discussions, and cost, ease, benefit
analysis and developing decision grids to prioritize solutions
🠶 Determining the proper scope of change initiatives based on business, structure and organizational
parameters and capabilities
🠶 Developing the business case to drive out the investments and expected returns externally or internally
for the key initiatives.
🠶 Creating a communication plan that helps guide the organization through the changes that will take
place as initiatives become implemented, and
🠶 building a roadmap focused on using project management best practices of implementation with
business champions, key initiatives, tactical focus, time and dates and a reporting structure to ensure
initiatives are moving forward as originally planned.
SELF ASSESSMENT
Direction: Choose the letter of the best answer.
1. Which is a disadvantage of strategic business analysis?
a. Makes management think in advance
b. Could be expensive in terms of time and money
c. Seamlessly make organization fit into its environment
d. Ensures consistency in the pursuit of goals and objectives
2. It encompasses all of the project work to identify business problems, definebusiness
opportunities, develop a business case, and recommend whether to initiate a project.
a. Strategic planning
b. Industry analysis
c. Strategy
d. Strategic business analysis
3. Which is true regarding strategic business analysis?
a. It looks at things from both corporate perspective and longer-term view
b. It has nothing to do with the role of strategy in a business
c. It deals with individual items
d. It helps employees make important decisions for the company
4. The process of the teaching analysis is aided by a number of tools. These toolsinclude:
a. Swot analysis
b. Porter’s five forces analysis
c. Pest analysis
d. All of the above
5. A firm’s internal capabilities are analyzed against external opportunities and with the aim of
optimally aligning a firm’s long-term goal with short-termdecisions.
a. Threats
b. Weaknesses
c. Strengths
d. Competencies
6. Which of the following statements isfalse?
a. Businesses can afford to analyze matters that are important it’s long-term survival in silos and
short termism.
b. Striking a balance between short-term and long-term concerns is one of the challenges faced
by management in the process of strategic ally analyzing a business
c. When designing a balanced scorecard for example, management should think of the impact
that each target and objectives that is contained in the strategic map will do to the long-run
survival of the company
d. The length of the term to be covered in the analysis depends on the nature and type of the
business
7. The four goals of a business are, except:
a. Give money to the poor for the sake of advocacy
b. Operating profitably
c. Satisfying customers needs
d. Keeping employees happy at their job
e. Complying with regulations
8. What factors might make it difficult to implement in yourstrategy?
a. All company policies
b. Training cost for new job tasks
c. Both
d. Neither
9. I. Customers are willing to pay more for a product that differentiates itself from its competitors
through overall cost leadership.
II. Good strategic managers continuously evaluate and respond to change.
a. I. False II.False
b. I. False II. True
c. I. True II. True
d. I. True II. False
10. Strategic planning is planning done by a company senior managers.
a. Emergency
b. Tax
c. Occasional
d. Long range