Strategic Analysis Model
Mauricette Atencio
ClearPoint Strategy offers an innovative platform that simplifies the process of implementing these models, ensuring that your organization can effectively plan, execute, and monitor its strategies.
A strategic framework is a structure designed to help organizations develop an action plan to achieve their goals. This entails using various strategic planning models to guide the organization toward effective strategy implementation and goal realization, tailored to specific scenarios where they are most effective.
At a glance, you can tell what the RAG status of each objective, measure, or initiative is. (Green indicates everything is going as planned, while yellow and red indicate that there are various degrees of trouble with whatever is being looked at.)
To implement the Baldrige framework in your organization, start with two questionnaires that help you self-assess based on the seven Baldrige Criteria categories, and get a snapshot of your strengths and opportunities for improvement.
The Hoshin Planning approach aligns your strategic goals with your projects and tasks to ensure that efforts are coordinated. This strategic management model is less focused on measures and more on goals and initiatives.
You visualize your objectives, measures and targets, measure programs, and action items in a Hoshin Planning matrix. Four directional quadrants (north, south, east, west) inform each other and demonstrate alignment.
From there, you will execute and track progress. After an issues-based plan has been implemented and the major issues you identified are resolved, then your organization might consider shifting to a broader, more complex strategic management model.
By nature, vision statements are aspirational and forward-thinking, but they need specifics in order to be realized. Goal-based planning tackles that challenge by setting measurable goals that align with your vision and strategic plan.
What type of company would the organic strategic planning model work best for? If your organization has a large, diverse group of stakeholders that need to find common ground, a vision that will take a long time to achieve, and a strong strategic emphasis on vision and values (instead of structure and procedures), this may be the right model for you.
You can use scenario planning at the individual and departmental levels, but it is especially useful for organizational strategy planning. If your company is part of an industry that tends to be volatile or your organization itself has had to navigate costly, unexpected changes in the past, scenario planning is an excellent tool for developing your strategic vision.
It can also be used to foster managerial thinking, encouraging leaders to consider the broadest range of future possibilities, and provide guidance when evaluating new projects or investment proposals.
The Ansoff Matrix was developed to help organizations plan their strategies for growth. It is a 2x2 matrix with product on one axis and markets on the other axis. Depending on the box you are in, you may choose a different strategy for growth:
The Ansoff Matrix is useful for organizations that are actively trying to grow. Not only does it help you analyze and clarify your current strategy, but it also helps evaluate the risks associated with moving to a new strategy.
The first step in applying the 7S model is to examine the current interconnectedness of these elements within your own organization; are there areas of weakness or inconsistencies? For example, you might discover that your skills training for employees is hindered by antiquated workflows and technology.
Constraints analysis is predicated on the idea that there are clear obstacles to strategy execution within your organization. Eliminating the weak link (or at least improving performance in that area) is the key to better results.
To apply constraints analysis correctly, you must first identify the constraint, or the main factor that limits your success. Process bottlenecks, faulty thinking, labor shortages, an unhealthy company culture, market conditions, or any number of other issues could be the culprit.
If you are set on pitching a particular strategic planning model to management, be prepared to give your boss or board of directors an example of another successful company that has utilized that particular model. An actual demonstration of success will make a somewhat abstract concept become more concrete.
The added complexities of a growing business may make it necessary to rethink your approach to strategy planning. For example, the Balanced Scorecard might work well for tracking organizational and departmental plans, but you may eventually want a system that easily extends to the individual level. For that, you might add OKRs to your management framework.
Strategy software like ClearPoint was built exclusively for strategy performance reporting. So not only does it solve the above issues but it actually improves the likelihood of executing your strategy successfully.
Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street.
SWOT analysis was first used to analyze businesses. Now, it's often used by governments, nonprofits, and individuals, including investors and entrepreneurs. There is seemingly limitless applications to the SWOT analysis.
The four steps of SWOT analysis comprise the acronym SWOT: strengths, weaknesses, opportunities, and threats. These four aspects can be broken into two analytical steps. First, a company assesses its internal capabilities and determines its strengths and weaknesses. Then, a company looks outward and evaluates external factors that impact its business. These external factors may create opportunities or threaten existing operations.
Creating a SWOT analysis involves identifying and analyzing the strengths, weaknesses, opportunities, and threats of a company. It is recommended to first create a list of questions to answer for each element. The questions serve as a guide for completing the SWOT analysis and creating a balanced list. The SWOT framework can be constructed in list format, as free text, or, most commonly, as a 4-cell table, with quadrants dedicated to each element. Strengths and weaknesses are listed first, followed by opportunities and threats.
A SWOT analysis is used to strategically identify areas of improvement or competitive advantages for a company. In addition to analyzing thing that a company does well, SWOT analysis takes a look at more detrimental, negative elements of a business. Using this information, a company can make smarter decisions to preserve what it does well, capitalize on its strengths, mitigate risk regarding weaknesses, and plan for events that may adversely affect the company in the future.
While SWOT analysis is a powerful tool, it does have some limitations. It can sometimes oversimplify complex situations and is susceptible to the subjectivity and bias of participants. The analysis also doesn't provide specific guidance on how to address identified issues and can lead to analysis paralysis if not followed by concrete action.
Both are strategic planning tools, but they serve different purposes. The five-force model analyzes the competitive environment of an industry, looking at its intensity and the bargaining power of suppliers and customers. SWOT analysis, meanwhile, is broader and assesses a company's internal strengths and weaknesses as well as its external opportunities and threats.
It can assist in strategic planning by pinpointing areas where the company excels and faces obstacles, helping to align the company's strategy with its internal resources and prospects in the market while mitigating its vulnerabilities and external challenges.
Porter's model has been used to analyze how globalization affects industry competition. For instance, globalization lowers barriers to entry in specific industries, intensifying the threat of new entrants from different regions.
It can also expand the pool of potential substitutes and alter the power dynamics with suppliers and customers worldwide. While Porter and others were doing this analysis for industries facing global competition decades ago, it's still applicable to sectors undergoing this process in the 2020s.
Using the model, we would begin by looking at the competitive rivalry. The AI sector is marked by high competition with key players ranging from tech giants to small startups. Rapid advances mean companies have to move quickly simply to maintain relevance. We would then need to gauge the power of suppliers of data sets and specialized hardware, which have ample power since AI firms rely heavily on these resources.
Moving to consumers, we would need to review the needs of individual consumers and whether larger companies can force AI firms to negotiate better services and prices for them. The field of AI has been attracting many new entrants, but there are significant barriers to entry, including high initial research and development costs. Lastly, the threat from the last force, the possibility of substitutes, depends on what a firm wants to do with its AI-based technology. The more complicated the tasks the AI is given, the more likely other goods and services can't substitute for it.
What all planning models have in common is that they help you translate strategies into action and aim to provide you with structure in the process of creating a strategic plan. But there are now countless frameworks, each with its own approach.
You should always start with strategic analysis. Through this process, you will be able to identify competitive advantage, assess organizational capacity, analyze external factors that might impact your strategy, and find other opportunities you could exploit.