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Strategic analysis of the firm
Strategy - a program, plan, general course of the subject of management to achieve strategic goals in any area.
The choice of strategy is directly related to the goals of the organization, and the most important and priority goals are to maintain and improve the long-term market position and competitiveness of the organization.
Strategic management - the theory and practice of ensuring strategic competitiveness and the effectiveness of decisions by developing an organization's strategy while placing responsibility for this work on its leaders.
Strategic analysis (portfolio analysis) is the main element of strategic planning. Strategic analysis acts as a strategic management tool, with the help of which the company's management identifies and evaluates its activities in order to invest in the most profitable and promising areas. The main method of portfolio analysis is the construction of two-dimensional matrices. With the help of such matrices, productions, departments, processes, products are compared according to the relevant criteria.
The first step is to define the mission of the organization.
Mission - the philosophy of existence, the strategic goal, the fundamental purpose of the organization, in which it differs from other organizations and within which it determines the nature of its actions. The content of the organization's mission includes philosophy (basic views, principles and values, a system of motives); description of the field of activity, the product of the organization, the goals of the organization (current and strategic); characteristics of potential and technologies; description of the internal concept, strengths of the organization, its competitive advantage, development prospects; characteristics of the market where the organization operates, description of the external image (image) of the organization. .
This process consists in establishing the meaning of the existence of the company, its purpose, role and place in market economy. It characterizes the direction in business that firms are guided by, based on market needs, the nature of consumers, product features and the presence of competitive advantages.
The second stage is the formulation of goals and objectives.
The terms “goals” and “objectives” are used to describe the nature and level of business claims.
The goal is a quantitatively or qualitatively expressed future state of the control object, the achievement of which will provide a solution to the problem.
Goals for the lower levels of the firm are seen as objectives.
The goal and main objectives provide the background in which the proposed strategies are formulated, as well as the criteria by which they are evaluated.
Goals and objectives should reflect the level of customer service. They should create motivation for people working in the firm. A target picture should have at least four types of targets: quantitative targets; quality goals; strategic goals; tactical goals.
Analysis and evaluation external environment is the third stage of strategic analysis.
This process is usually considered the initial process of strategic planning, as it provides the basis for developing a strategy for behavior.
The external environment is the area of strategic changes that are carried out in the process of implementing the strategy.
Analysis of the environment involves the study of the macro environment and the immediate environment (micro environment).
Analysis of the macro environment involves studying the impact on the firm of such environmental factors as the state of the economy, legal regulation, political processes, natural environment and resources, social and cultural components of society, scientific and technological level. The macro environment involves the study of macroeconomic, social, legal, international and technological factors that can affect the organization. The macro environment is the same for all organizations operating in it.
The microenvironment is the immediate or industry environment, i.e. the environment in which the organization operates. It includes an assessment of the competitive structure of the industry in which the organization operates, as well as key parameters for the development of the industry. The microenvironment is individual for each organization, any enterprise has a unique combination of operating factors. Analysis of the microenvironment includes the study of the following main parameters: buyer, supplier, competitors, market work force.
Buyer and Market. You need to get answers to the following questions:
Is the buyer the end user of the product?;
What is the price sensitivity of different types of products?;
How stable are producer-buyer relationships in this industry?;
What is the distribution of buyers in terms of geography, sales volume?
Competitors. Answering the following questions will help strategists assess the competitive position of an organization:
What is the level of competition in the industry?;
What is the scope of competition?;
How fast are other firms in the industry currently growing?;
What percentage of revenue do competitors spend on advertising, research and development?;
To what extent are competitors involved in integration?
Government. The real and predicted degree of influence of the state and its bodies will help to determine questions of this type:
What government actions have affected the company in the past?;
To what extent are government regulations in place in areas such as advertising, safety, quality, pollution control, etc.?;
To what extent do government authorities allow or restrict the activities of foreign competitors?
The answers to these or similar firm-specific questions will provide a general idea of the external environment.
The external environment can create opportunities or threats for an organization. Developing this idea, the American management theorists G. Johnson and K. Schools (1989) indicate that the external environment from the perspective of strategic management presents two main problems. The first is the formation of an analytically substantiated point of view on the general or main impact of the external environment. The second is the difficulty of trying to analyze the impact of each environment variable.
The study of the external environment of the organization is carried out using a number of modern methods and analysis tools: PESTLE-analysis, which allows you to analyze the factors of the macro environment and evaluate them; the model of five competitive forces by M. Porter, with the help of which a structural analysis of the competitive environment is carried out; assessment of the attractiveness of strategic economic zones, the result of which is the identification of prospects that open up in a particular area; SWOT analysis, which allows you to establish lines of communication between the strengths and weaknesses of the organization and the opportunities and threats from the external environment; identification of specific opportunities and threats is carried out using the matrix of opportunities and threats. The integrated use of these tools allows for a deep strategic analysis of the external environment.
The fourth stage is the analysis and assessment of the internal environment.
Analysis of the internal environment allows you to determine those internal capabilities and the potential that the firm can count on in the competitive struggle in the process of achieving its goals. Analysis of the internal environment allows you to better understand the goals of the company and formulate its mission.
The internal environment is studied in the following areas: human resources, production, finance, marketing, organizational structure etc.
The analysis determines the completeness (quality) and quality of the resources available to the organization in the functional areas of its activities (for example, production, sales, research and development, personnel, finance, etc.). His methods will be presented below, but now it should be noted that simple method The study of internal resources is to consider the key strengths and weaknesses of the organization. A more difficult way is to use the concept of the value chain.
The purpose of the analysis is to develop an overall picture of the internal influences and constraints on strategic choices. Internal analysis focuses on two areas: identifying the strengths and weaknesses of the organization and identifying expectations and opportunities to influence the strategic planning process of owners (shareholders) and staff. When performing this analysis, the following questions must be answered:
Who is the shareholder of the company; Are these individuals institutional investors or individual shareholders?;
Are the goals of the shareholders defined, do they seek to increase the cost of capital or to increase the return on capital?;
What type of company do shareholders prefer?
Employees are an important object of the internal analysis stage. The pace at which strategic changes will take place largely depends on them.
The fifth stage is the development and analysis of strategic alternatives, the choice of strategy.
Here decisions are made about how the firm will achieve its goals and implement corporate mission. To make effective strategic choices, senior managers must have a clear, shared vision for the firm. The strategic choice must be definite and unambiguous.
Development of strategy options. Strategic choice involves developing a series of strategic alternatives based on the company's goals, strengths and weaknesses, and external opportunities and threats. Each strategic alternative may represent possible courses of action. At this stage, the following main question appears: what directions of strategic development seem to be the most acceptable? When developing strategies, it is important to take into account as many options as possible, as there is a tendency to consider only the most obviously acceptable options and discard the rest early in the development of alternatives. However, this assessment is always subjective.
Evaluation of strategy options. In the process of strategic analysis, various options for the corporation's strategy should be evaluated. In order to choose one or another option, strategy developers compare them with each other, taking into account the extent to which each of them is able to achieve the goals of the organization. The optimal version of the strategy should provide the best balance between the strengths and weaknesses of the organization, the opportunities and threats of the external environment.
The most significant criteria for such an assessment are the following two. Is the strategy appropriate for building on the strengths of the organization and overcoming its weaknesses, seizing opportunities while minimizing threats? Is the strategy acceptable to the company's participants?
Choice of strategy, strategic lines of conduct and plans. The choice of strategy is the selection of those options from those proposed in the previous stage that meet the criteria and which the management is going to follow. It can be a single strategy or a whole set of alternatives. It is important to emphasize that there is usually no rigidly defined plan for the sequence of actions to choose from among alternative strategy options.
Strategic policies and plans include work in areas such as research and development, capital requirements and workforce issues.
The sixth stage is the implementation of the strategy. Execution of the strategic plan is a critical process, because in the case of a real plan leads the company to success. It often happens the other way around: a well-designed strategic plan can “fail” if steps are not taken to implement it.
It is not uncommon for firms to fail to implement their chosen strategy. Reasons for this:
Incorrect analysis and erroneous conclusions;
Unforeseen changes in the external environment;
The inability of the firm to involve its internal potential in the implementation of the strategy.
It is necessary to have a clear plan of action for the implementation of the strategy, providing for the provision of the plan with all the necessary resources.
Depending on the plans of the enterprise for the implementation of a particular strategy, the goals of its further development, as well as the current strategic position in a particular sector of the economy, approaches are chosen to assess the competitive positions of strategic business units and the attractiveness of the market. The following approaches are best known in the literature: the portfolio matrix of the Boston Consulting Group (BCG matrix), General Electric - McKinsey or "business screen", the matrix of the consulting company Arthur D. Little, the matrix of the directed policy of the Shell company, the Ansoff matrix, the Abel matrix.
Successful implementation of a strategy requires that the structure, culture, and levers of the organization be aligned with it. Different strategies and environments may require the organization to have different structural changes, different cultural values and control systems. It is also necessary to formulate plans for resources and different functional areas.
The seventh stage is the evaluation and control of the strategy. At this stage, feedback is provided between the process of achieving the goals provided for by the strategic plan and the goals themselves.
The main task of such control is to find out to what extent the implementation of the strategy leads to the achievement of the company's goals and mission. Therefore, the adjustment based on the results of strategic control can concern both the strategy and the goals of the company, which fundamentally distinguishes this type of control from operational control, in which the goals current plan are unshakable.
One of the results of strategic analysis is the definition of the overall goals of the organization, which determine the scope of its activities. Tasks are defined on the basis of goals. They are used to represent strategic planning indicators. Written figures may be of a financial or non-financial nature. Financial indicators are numerous, expressed in numbers, convenient for comparing strengths and weaknesses various options strategic development, with their help it is easy to exercise control.
enterprise development strategy
Chapter 1. Theoretical aspects of the strategy development process ………..3
1.1. Analysis of the external environment of the organization……………………………………...6
1.1.1. PEST analysis…………………………………………………………….…6
1.1.2. Matrix of Opportunities and Matrix of Threats…………………………….8
1.1.3. Analysis of the immediate environment…………………………………………………12
1.2. Analysis of the internal environment of the organization…………………………………14
1.2.1. Analysis of the strengths and weaknesses of the organization…………………….14
1.2.2. SWOT analysis………………………………………………………….16
1.3. Compiling a profile of the organization’s environment………………………….…17
1.4. BCG Matrix…………………………………………………………….18
Chapter 2. Development of a strategy for ELENA IMPEX LLC ……………....21
2.1. General characteristics of the activities of LLC “ELENA IMPEX”…….….21
2.2.Mission of the organization………………………………………………………..23
2.3. Analysis of the internal environment……………………………………………..……23
2.3.1. Analysis of the strengths and weaknesses of the organization………….……..……23
2.3.2. SNW – analysis ……………………………………………………………25
2.4. Analysis of the external environment………………………………………………………..28
2.4.1. Ana from the factors of the immediate environment……………………28
2.4.2. PEST analysis……………………………………………………………….37
2.4.3. Matrix of Opportunities Matrix of Threats………………………………..45
2.5.SWOT – analysis……………………………………………………………....50
2.6.Profile of the organization’s environment…………………………………………………..53
2.7.Product marketing strategy……………………………………...57
2.8.BCG matrix………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
Chapter 3. STRATEGY OF THE FIRM LLC "ELENA IMPEX" …………67
Conclusion …………………………………………………..................70
Bibliography ………………………..................71
INTRODUCTION
The search for factors of strategic success has long been the main concern of managers. This used a variety of ways: all sorts of reports, speeches and even memoirs of managers of successful enterprises; findings from case studies that were more systematic; empirical studies of success factors, confirmed from scientific and theoretical positions.
The pace of changing conditions and increasing knowledge in today's world is so high that planning seems to be the only way to formally anticipate future problems and opportunities. It provides the organization of the means of creating an activity plan for both perspective and current periods and provides the basis for making managerial decisions.
Formal planning helps to find the most appropriate courses of action, substantiate and systematize planned decisions, reduce the risk of making wrong decisions due to erroneous or insufficient information about the organization's capabilities or the external environment. Planning, since it serves to formulate established goals and develop ways to implement them, helps to create a unity of common goals within the organization and thus is the organizing principle in the activities of the enterprise.
The development of an enterprise strategy begins with the definition of the main guidelines for entrepreneurial activity, the so-called philosophy, which, in combination with the motivational idea, determines the main directions for the development of the enterprise and sets the goals of the company. An important source of information for the formation of strategic goals is information about the internal and external environment, the analysis of which allows you to assess the reality of the goals set, predict possible changes and choose the most effective strategy for the enterprise. The meaning of strategic analysis is that if you understand the competitive dynamics of the industry, then you can think about what steps to take, what needs to be changed, how to use certain opportunities, advantages, and competencies. The firm can either adapt to changing conditions or counteract them by trying to change the competitive environment. If a company tries to predict the future more often than competitors, then it is more likely that it will be more likely to control future situation, and competitors can only react to it. In addition to forecasting, the task of strategic analysis is also to identify, develop and protect factors of strategic success from competitors.
A modern tool for managing the development of an organization in the face of increasing changes in the external environment and the associated uncertainty is the methodology of strategic management.
Practice shows that those organizations that carry out integrated strategic planning and management work more successfully and make profits that are significantly higher than the industry average. Many experienced planners and just energetic people do not achieve the desired success due to the fact that they spread their forces trying to cover as many markets as possible, produce as many different products as possible and satisfy the needs of various customer groups. For success, a purposeful concentration of forces and a correctly chosen strategy are necessary. In other words: who plans his strategy better, he achieves success faster.
Chapter 1. Theoretical aspects of the strategy development process.
1.1. Analysis of the external environment of the organization.
The external environment is the source that feeds JSC ELENA IMPEX with the resources necessary to maintain its internal potential at the proper level. The company is in a state of constant exchange with the external environment, thereby providing itself with the possibility of survival. The main strategic task of the company is to ensure its interaction with the environment, which would allow it to maintain its potential at the level necessary to achieve its goals in the long term. To achieve this, the company's management constantly analyzes the state of the external environment.
1.1.1. PEST -analysis.
PEST analysis is a trend analysis that is essential to the firm's strategy. It consists in identifying and evaluating the factors of the macro environment on the results of the current and future activities of the enterprise. There are four groups of factors that are most significant for the strategy of the enterprise: political and legal, economic, socio-cultural, technological.
The purpose of PEST analysis is to track changes in the macro environment in four areas and identify trends and events that are not under the control of the company, but that affect the results of strategic decisions made. These are the main directions:
1. Politics. Analysis political components the macroenvironment has a very great importance and is carried out in order to have a clear idea of the intentions of the public authorities in relation to the development of society and of the means by which the state intends to carry out its policies. In the process of analysis, it is mandatory to find out what programs various party structures are trying to put into practice, what relations the government and regional authorities have in relation to various sectors of the economy and regions of the country, what changes in legislation and legal regulation are possible as a result of the adoption of new laws and new regulations governing economic processes, as well as such basic characteristics political system: which political ideology determines the policy of the government, how stable the government is, how capable it is of pursuing policy, what is the degree of public discontent and how strong are the opposition political structures in order to use this discontent to seize power. All this applies to the local regional authorities.
And also, this includes the study of laws and other regulations that establish legal norms and frameworks for relations. This gives the company the opportunity to determine for itself the permissible boundaries of actions in relations with other subjects of law and acceptable methods for defending their interests. Much attention is paid to the effectiveness of the legal system, established traditions in this area and the procedural side of the practical implementation of legislation.
2. Economy. An analysis of the economic components of the macro environment makes it possible to understand how resources are formed and distributed. It is mandatory to analyze and take into account the value of the gross national product, inflation rate, unemployment rate, the refinancing interest rate of the Central Bank of the Russian Federation, labor productivity, taxation rates, balance of payments, savings rates and many other indicators. Also taken into account is the overall level economic development, both the region and the country as a whole, extracted natural resources, climate, type and level of development of competitive relations, population structure, level of education of the labor force and wages.
3. Society. The analysis of social components is carried out in order to establish the degree of impact on the business of such social phenomena and processes, such as: the attitude of people to work quality of life; existing customs and beliefs in society; values shared by people; demographic structures of society, population growth, level of education, mobility of people or willingness to change their place of residence, etc. This analysis is very important, since social components are all-pervasive, affecting other components of the macro environment and the internal environment of the company, and also that any social changes can lead to very significant changes in the environment of the company.
4. Technology. Analysis technological components is carried out to timely identify opportunities that can allow the company to develop dynamically and produce new products, improve existing ones, modernize production technology and product sales as a result of the development of science and technology. The analysis takes into account the fact that the progress of science and technology, along with huge opportunities, can have equally huge threats to the company. It is important to see new prospects opening up in a timely manner, to modernize production and expand markets for products.
Strategic analysis is a means of transforming the database obtained from the analysis of the environment into alternative strategic plans for the development of the company.
Strategic analysis tools include:
Formal models and quantitative methods, most widely used in the 70-80s by companies in developed countries;
Independent creative analysis based on the specifics of the given company, analytical and intuitive abilities of managers and planners.
Formal methods and models lost some of their popularity in the 1980s. However, this did not mean a rejection of them, but was expressed in the fact that today the methods of strategic analysis are used with greater caution, taking into account specific circumstances.
Strategic analysis can be divided into two main steps:
1) comparison of the benchmarks outlined by the firm and the real opportunities created by the business environment, analysis of the gap between them;
2) analysis options future state of the firm, identification of strategic alternatives.
When strategic alternatives are identified, the firm proceeds to the final stage of strategy development - the choice of a specific strategy option and the preparation of a strategic plan.
Gap Analysis
Rice. 2.4. Gap analysis scheme
(Fig. 2.4). The specific application of gap analysis means:
Determination of the main interest of the company, expressed in terms of strategic planning (for example, in increasing the number of sales);
Finding out the real possibilities of the company in terms of the current state of the business environment and its expected future state (in 3 or 5 years);
Determination of specific indicators of the strategic plan, corresponding to the main interest of the company;
Establishing the difference between indicators of strategic
th plan and opportunities dictated by the real situation of the company; ^ and
Development special programs and methods of action
needed to fill the gap.
Another way to analyze the gap is to determine the difference between the highest expectations and the most modest forecasts. For example, if top management expects a real rate of return on capital invested of 20%, but analysis shows that 15/o is the most realistic value, discussion and action is required to close the 5% gap. This can be done in several ways, for example:
By increasing productivity to achieve the desired 20%;
By abandoning more ambitious plans in favor of 15/o,
By hoping to improve the situation in accordance with one of the slogans of planning: "Minimum effort and more Trust in the natural course of things."
The following methods of strategic analysis are usually used to identify strategic alternatives, possible options for a strategic plan.
Analysis of cost dynamics and the experience curve. The model links the definition of strategy to the achievement of cost advantages. It is assumed that every time the volume of
production doubles, the cost of creating a unit of production is reduced by 20% (Fig. 2.5).
Rice. 2.5. Experience Curve
The reduction in costs with an increase in production volume is due to a combination of the following factors:
Advantages in technology that arise with the expansion of production;
Learning by experience most effective ways organization of production;
Economies of scale effect.
In accordance with the experience curve, the main direction of the firm's strategy should be to gain the largest market share, since it is the largest of the competitors who has the opportunity to achieve the lowest unit costs and, therefore, the highest profits.
The pursuit of market dominance as a strategic imperative pays off in fast-growing markets that give competitors room to grow. The application of the experience curve is possible mainly in the branches of material production.
Market dynamics analysis, product life cycle model. The analysis of the dynamics of the market for a given product is based on the well-known model of the life cycle of a product, which is an analogy of the life cycle of a biological being. The life of a product on the market is divided into several main stages, each of which has its own level of sales and other marketing characteristics:
Birth and introduction to the market - small sales and growth-oriented strategy;
Growth stage - a significant increase in sales and a strategy for rapid growth;
Maturity stage - sustainable sales and stability-oriented strategy;
The stage of market saturation and decline - sales decline and reduction strategy. ,
The purpose of the life cycle model is to correctly determine the business strategy for each stage of the “Product's journey on the market. There are many modifications of june cycles depending on the types of goods. However, the strategy should not be tied too tightly to the life cycle model. Very often, the life of a product on the market does not fit into the known curve (Fig. 2.6).
The product-market model is a matrix that includes the classification of markets and the classification of products into existing, new but related to existing, and completely new products (Fig. 2.7).
Rice. 2.7, Product-Market Matrix
The matrix shows the levels of risk and, accordingly, the degree of probability of success when various combinations product-market model. This model is used to:
Determining the probability of successful activity when choosing a particular type of business;
Choice between various types business, including when determining the ratio of investments for different business units, i.e. in the formation of the company's securities portfolio.
Portfolio strategy analysis models determine the present and future position of the business in terms of the attractiveness of the market and the ability of the business to compete within it. The initial classic portfolio model is the matrix of the Boston Consulting Group (BCG), which is shown in Fig. 2.8.
The BCG matrix indicates four main business positions:
Highly competitive business in fast growing markets -
ideal position "star"; ,
A highly competitive business in mature, saturated, non-stagnant markets (providing steady profits "cash cows" or "money bags") is a good source of cash for the firm;
2.8. BCG portfolio model
Not having good competitive positions, but operating in promising markets "question marks", whose future is uncertain;
The combination of weak competitive positions with markets that are in a state of stagnation are the "dogs" rejected by the business world.
Ways to use the BCG portfolio model:
To determine interrelated conclusions about a position
business unit (business) that is part of the enterprise, and its strategic prospects; "
To negotiate between top managers and managers at the business unit level and make decisions about the amount of investment in a particular business unit (for example, existing and fast-growing industries, "question marks" for expanding business and strengthening their positions, as a rule, are in dire need of a constant influx of funds, and "moneybags", limited in their ability to grow, often have a surplus of cash). In other words, using the BCG matrix, the company forms the composition of its portfolio, i.e. determines combinations of capital investments in different industries, different business units.
Strategy options within the BCG matrix:
1 1. Growth and increase in market share - the transformation of the "question mark" into a "star" (aggressive "question marks" are sometimes called "wild cats").
2. Maintaining market share is a strategy for cash cows whose revenues are important for growing businesses and financial innovation.
3. "Harvesting", i.e., obtaining a short-term share of the profits as much as possible, even at the expense of reducing market share - a strategy for weak "cows" without a future, unfortunate "question marks" and "dogs".
4. Liquidation or abandonment of the business and the use of the resulting funds in other industries is a strategy for "dogs" and "question marks" who no longer have prospects for improving their POSITIONS.
Evaluation of the BCG model. The advantages of the model include:
Use to study the relationship between the business units that make up the company, as well as their long-term goals;
The ability to be the basis for the analysis of different stages of development of the company (business) and, accordingly, the analysis of the difference in its needs at these stages;
Presentation of a simple and understandable approach to the formation of a company's business project portfolio,
The disadvantages of the model are as follows.
1. Does not always correctly assess business opportunities. For a business unit defined as a "dog", an exit from the market may be recommended, while external and internal factors are able to change the position of the business. Yes, small farming, supplying vegetable products, in the 70s could be assessed as a "dog", but by the 90s, environmental degradation and a special attitude towards "clean" products created new prospects for this business.
2. Overly focused on cash flow, while investment performance is an equally important indicator for the company. Aimed at super growth and ignores the possibility of business recovery, the use of new management methods.
The McKinsey matrix is more difficult option portfolio model (multi-factor matrix), which the company developed by order of General Electric. The factor of “opportunity to expand the market” here has turned into a multifactorial concept of “attractiveness of the market (industry)”. The factor “relative market share” has risen to the level of a strategic position (rhyme that characterizes various elements of the internal environment of an enterprise (Table 2.4).
Table 2.4
Factors that determine the attractiveness of the market and the strategic position of the company (business)
The firm must evaluate its position on each of the factors shown in the table, and determine it based on three possible levels: low, medium and high. Self-assessment should be as objective as possible. Based on it, the company determines its place in one of the squares of the McKinsey matrix (Fig. 2.9). As can be seen from the matrix, the upper left corner means favorable prospects for growth, the diagonal separating the upper left corner and the lower right corner means a dual position and limited growth, the lower corner means the absence of real opportunities for future development.
Evaluation of a multidisciplinary model. Its advantage over a simple portfolio model is that it takes into account the largest number of significant factors of the company's internal and external environment. However, the use of this model is limited in the absence of specific recommendations for behavior in a particular market, and also because of the importance of a subjective, distorted assessment by the firm of its position.
Rice. 2.9. Portfolio model "McKinsey"
The PIMS model, which can provide more specific material for making strategic decisions, allows for complex business analysis. The materials of this model are the result of summarizing the experience of more than 3,000 enterprises in Europe and North America, The performance of companies is reflected in approximately 30 main variables that affect the level of profit, and is divided into three groups: the competitive position of the business, the characteristics and attractiveness of the market in which the enterprise operates, and the production structure of the enterprise. The PIMS model also highlights the factors that greatest influence on the level of profit: capital intensity, then in descending order - the relative quality of the product, the relative market share, labor productivity. This model allows the company to learn from the experience of other enterprises, choose the most convenient ways future actions to generate high income. In the conditions of the Russian economy, the study of this model is more cognitive in nature, since this method of strategic analysis was developed for highly developed, saturated, relatively stable markets and types of business. From this point of view, the statistical experience of North American and Japanese business is of limited use for our economy.
Strategic analysis is needed in order to provide managers with the necessary information to develop a company's strategy. Everything seems to be clear and logical, but, in fact, in practice, companies face one of the fundamental problems of strategic management.
When a company tries to conduct a strategic analysis, the question immediately arises of what, in fact, a strategic analysis should include, what information should be the output of this analysis, and what information managers need to develop a strategy. Many attempts have been made to somehow formalize this process, that is, to determine the standard formats of strategic analysis, following which the company is guaranteed to provide itself necessary information to develop a strategy.
But the problem is that there are a lot of strategic analysis tools, and at the same time there is no guarantee that if they are all used, the company will be able to develop some kind of correct strategy. The process of developing a strategic plan, in this case, as well as the adoption of any other decision, in principle, is not completely formalized. Strategic analysis techniques can only help organize information for decision making, but the decision itself remains with managers. In this articles we will talk about the most common methods of strategic analysis.
So, when a company comes to understand the need to implement strategic management and begins to take the first steps in this direction, we can say that it has managed to solve the first fundamental problem of strategic management.
Although sometimes there are situations when the owners and management of the company realize the need for strategic analysis, but at the same time the strategic choice has to be made blindly. For example, once at a seminar one of the participants ( CEO small company engaged in wholesale and retail sales hours) told me a curious story. Even at the very beginning of the business, she had to make a very important strategic decision, namely to choose a foreign supplier. And I immediately wanted to conclude a dealer agreement with exclusive sales in Russia.
To select a supplier, it was decided to visit a specialized industry exhibition. The calculation was made that all major watch manufacturers would be represented at the exhibition, it would be possible to collect information from them and make a strategic choice. But it turned out that not everything is so simple. Representatives of all companies were ready to talk for a very long time about what wonderful products they have, but at the same time they did not give practically any numbers.
That is, we are not even talking about the fact that they did not provide information about the sales of their products in other countries, because they could not even provide a clear price list, according to which they are ready to supply products to their dealers. Therefore, I had to make a choice based only on intuition. They did not cooperate with companies producing premium products. We immediately focused on the middle segment and eventually guessed right. Products began to be sold both in Moscow and in the regions. But it was possible not to guess, but in this case, according to the general director, there was no other option.
Methods of strategic analysis
If you open books on strategy, then you can find a wide variety of all kinds of strategic matrices in them, which are just designed to conduct a standard strategic analysis in its various aspects. But, as a rule, in practice (at least in Russian practice) literally several methods are used. In addition, these books do not say how to use the results of such a large amount of analysis.The most common strategic analysis techniques include the following:
Here it is necessary to clearly realize that in order to develop a strategy, on the one hand, there should not be little information, but, on the other hand, there should not be a lot of it. In addition, the time factor is also important. Sometimes in practice it is more important to make a decision that may not be quite correct and refined, but now, than a more reasonable and correct one tomorrow. Since either the information on the basis of which the correct solution was developed may become outdated, or, as they say, “the train has already left” and the correct solution does not save the situation.
The simplest (in terms of perception of results) and the most common tool for strategic analysis is the SWOT analysis. The main idea of a strategic SWOT analysis is that when developing a strategy, you need to take into account the main factors that affect the company's business. Moreover, these factors are considered in two sections (see Fig. Rice. one):
Fig.1. Strategic SWOT Analysis
Accordingly, when it comes to the factors of the external environment, among them there are favorable opportunities and threats for the company. The same factors can affect the business of other companies, incl. competitors, however, this influence can be assessed differently. Among the factors of the internal environment, the strengths and weaknesses of the company are distinguished.
Here it should be noted right away that the strengths and weaknesses of the company are not an absolute concept, but a relative one. That is, the factors of the internal environment are mainly analyzed in comparison with competitors. It is clear that the company does not complete information about the state of affairs of their competitors. Companies sometimes do not even know everything about themselves that they would like, but here you need to know the same about competitors. But, nevertheless, when determining the factors of the internal environment that significantly affect the business, it is necessary to classify them into strengths and weaknesses, comparing your company with competitors.
Naturally, to collect information about competitors, you will have to spend certain time and financial resources. Therefore, if the company really intends to introduce a full-fledged strategic management system, then this will have to be done. Of course, you still need to understand how detailed information about competitors is really required by the company, besides, some of the information can be quite accessible and open. In any case, monitoring information about competitors is one of the functions of the development directorate.
It should be noted that in practice it happens that the same environmental factor for one company is an opportunity, and for another - a threat in the external environment. When our team of consultants, carrying out a consulting project, carried out, together with the Customer's working group, a strategic SWOT analysis at one dairy plant, among other environmental factors, such a factor as “bad collective farms” was also considered.
It meant that the enterprise surrounded a large number of small farms, which were in a very deplorable state. On the one hand, this factor should be considered as a threat in the external environment, but for this enterprise it was an opportunity. The fact is that if instead of this large number of inefficient collective farms there were several large farms, then a very large competitor (one of the leaders of the dairy industry in Russia) would buy them up, and in such a situation it was unprofitable for him.
For this dairy plant, such a state of the raw material base, on the contrary, was considered as an opportunity to gain control over them, and then to enlarge and develop these collective farms. Thus, it turns out that the same environmental factor for one company can be a threat, and for another - an opportunity.
Using even such a simple tool as a SWOT analysis helps a company to focus on strategically important issues. The CEO of a company at my seminar on strategic management he said right away that using a tool like a strategic SWOT analysis helped them increase profits. They constantly monitored the factors affecting the company's business, and concentrated on the most significant ones, that is, they worked according to priorities.
What to do with the results of strategic analysis?
The results of the strategic SWOT analysis should be used in the following way (see Rice. 2). After analyzing the selected factors, it is necessary, firstly, to assess the degree of their influence on the company's business, for example, on the basis of a point system. That is, the impact of all positive factors (external and internal) on the company's business is estimated, say, from one to three pluses, and the impact of negative factors - from one to three minuses, respectively.If the influence of some factor was rated "0", then this means that now the influence of this factor is too weak to be taken into account when developing a strategy, so it should be excluded from further analysis. You can use a five-point or ten-point scale, but, as practice has shown, the wider the scale is used, the more difficult it will be to choose and concentrate on key factors later.
Secondly, the factors must be ranked in descending order of their impact on the business (as is done in the examples).
Thirdly, you need to try to understand how you can increase the influence of opportunities in the external environment, how to avoid threats, how to use the company's strengths more effectively and what to do with weaknesses.
Fig.2. Key Uses for Strategic SWOT Analysis
When assessing the degree of influence of factors on the company's business, of course, it is necessary to take into account the period for which the strategy is being developed. After all, some factor may be insignificant if the company is developing a strategic plan for a year, but at the same time the same factor can have a significant impact on the company if we are talking about a period of three or five years. Therefore, by the way, some companies sometimes conduct several strategic SWOT analyzes for different periods of strategic planning.
Such monitoring of factors should be carried out constantly. Some Russian companies, for example, hold it once a quarter (or at least once a year). But here it is necessary to pay attention to the fact that quarterly monitoring is carried out as part of a regular procedure - the regulation of strategic analysis. In addition, you need to constantly monitor the sharp changes in the situation.
Strategic SWOT analysis is the simplest and most understandable business screen of the company, which allows the company to navigate the current situation and determine the strategic directions for development.
Of course, the information contained in a strategic SWOT analysis is actually the tip of the iceberg, so to speak. In addition to SWOT analysis, there are even more complex and meaningful strategic analysis techniques, but, nevertheless, while these techniques have not yet been implemented, one can start by using SWOT analysis. Over time, of course, the set of strategic analysis tools needs to be expanded, but this must be done gradually, because. if you immediately try to use a large set of tools, then none of them will actually work effectively.
It should be noted that there should not be too many factors in a strategic SWOT analysis. There must be, indeed, the most essential. There really shouldn't be too many of them. When a strategic analysis was carried out in one large energy company, then when collecting information, they went, as they say, from the bottom up in order to take into account as much information as possible and not miss out on essential information.
The work of collecting factors was distributed among departments, and as a result, the total number of factors amounted to several hundred. The selection of the most significant factors from this total number was carried out first by the development directorate, and then by the strategic committee. As a result, a table was obtained, located on one page and containing a summary of all the information collected (the very “tip of the iceberg”).
After completing this work, the company compared the results of the strategic SWOT analysis, which was carried out before and after such detailed work. It turned out that about 70% of them coincided. But in this situation, managers checked themselves, that is, how correctly they intuitively feel the situation in which the company is located.
It turns out that in practice a more detailed strategic analysis does not always provide newer qualitative information. For the future, the company decided to act like this. She constantly monitored the factors using the business SWOT analysis screen and, when new weighty factors appeared, convened a meeting of the strategic committee and made a decision on how to respond to the changed situation. Naturally, before the strategic committee was held, the development directorate analyzed the situation and proposed several options for the strategy for discussion.
When conducting a strategic SWOT analysis for the first time, it is better to follow this simple principle. First write down all the factors that come to mind. It doesn't matter that this could end up with a very long list. The main thing is not to miss anything important. And then you need to evaluate each factor according to the accepted scale (for example, by the number of pluses and minuses).
Then rank all the factors in descending order of importance and start cutting off those that received the lowest scores first. In addition, it must be remembered that each factor recorded in the SWOT analysis should be further taken into account when developing a strategy. Therefore, if a factor either received a low assessment of the degree of influence, or it is not clear how it can be taken into account when developing a strategy, then this factor should be excluded from further analysis and strategy development.
It is necessary to pay attention to one more important point. Use strategic management in the company is impossible without the active participation of the CEO of the company. And in order for the CEO to be able to participate in this process, as practice has shown, the tools used must be simple and understandable for use. This is especially true for large companies.
CEOs are understandably busy people, so it will be difficult for them to immediately grasp a large number of complex schemes. Naturally, all simple solutions have a certain efficiency limit, so you have to complicate solutions, but you need to do this gradually.
First learn how to use simple tools, and then slowly complicate.
Note: the topic of this article is discussed in more detail at the workshop
At present, one of the fundamental scientific problems is the formation of a system for assessing the effectiveness of regional strategic development. The urgency of this problem lies in the fact that in the course of the reform of Russian society, guidelines were lost that made it possible to assess the direction and effectiveness of socio-economic development.
The various macroeconomic, micro-everyday, socio-humanistic, and often purely emotional evaluation criteria used for this purpose make it quite difficult to give an unambiguous assessment of the situation in the region, the direction of regional development, and the effectiveness of regional policy.
The methodological basis of the tools for the strategic analysis of territorial entities can be both general scientific methods (system and situational analysis, an integrated approach, program-targeted planning, etc.), as well as analytical and prognostic methods and methodological techniques borrowed from different areas knowledge (sociology, psychology, anthropology, ecology, aesthetics, etc.).
The use of analytical methods in strategic management is associated with the use of a systematic approach to management, which allows you to group the modifications of the systematic approach used in the practice of strategic management and highlight the following modifications of the systematic approach: integrated, functional, target, resource, integration, communication, historical, program, animation , standard, dynamic and economy mode.
The managerial significance of methods for analyzing the external environment of an organization is expressed in the ability to determine the strength of manifestation of each significant factor in the external environment, as well as the degree of sensitivity of the strategy to external factors.
The choice of the method of analysis of the external environment is influenced by the following characteristics of the external environment:
Complexity is the number of factors that need to be addressed;
Mobility is the rate at which the environment changes;
Uncertainty - the amount and reliability of information about specific environmental factors;
The familiarity of events is the novelty of the changes that occur.
Methods of analysis of the external environment can be aimed at:
Establishment and assessment of environmental factors that pose a threat or contribute to the development of the organization;
Studying the changes that affect the current activities of the organization, and establishing their trends;
Development of possible reactions to the development of environmental factors;
Discovery of new ways to create some utility that has value for consumers.
The study and comparison of the main methods of strategic analysis shows that most of the concepts and applied methods are focused on application at the corporate level, and the strategic decisions themselves, due to the fact that the capital of the organization as a whole is in the focus of planning, are reduced to determining the optimal investment structure.
Strategic planning for the development of the city and the region involves not only the development of a program of action, but also the monitoring of their socio-economic condition. Monitoring data are compared with development goals and criteria, which makes it possible to evaluate the effectiveness and efficiency of the measures taken. It is assessed how compatible the developed strategy is with resources, with opportunities environment whether the strategy helps to solve the critical problems of the city and the region, whether it receives the support of residents.
Monitoring and evaluation of the development of the regional socio-economic system as a whole helps to make sure that the projects are effective and their implementation is proceeding at a normal pace, as well as to determine if there is a need for adjustment. Note that monitoring identifies indicators or results, while evaluation compares results with specific indicators and with the plan as a whole; without monitoring, project evaluation is impossible.
Based on the analysis of the economic and social situation in the region, a SWOT analysis matrix was compiled, the results of which are presented in tables 1-3.
Table 1 - Capability Matrix
Table 2 - Threat Matrix
The above version of the SWOT-analysis allows, firstly, to notice the main directions of development of the region, which should be emphasized in the near future, secondly, to identify the main directions for future improvement of the socio-economic situation in the region and, thirdly, to pay attention to weaknesses that need to be eliminated.
The SWOT analysis shows that today the Kursk region has all the potential to become a pivotal region. The main strengths owned by the region include: an advantageous geo-economic position, the presence of natural resources in the region, a highly developed engineering industry, the availability of energy resources (energy supply), the presence of a diversified processing complex, the availability of highly qualified human resources, the presence of attractive tourist and recreational facilities , extensive external relations. The main opportunities of the Kursk region include: firstly, a great potential for the implementation of innovative projects, secondly, an increase in investment attractiveness, thirdly, an increase in the competitiveness of territories, fourthly, unlimited opportunities for the development of small and medium-sized businesses, in including in innovative sectors for the region, fifthly, increasing the effectiveness of socio-economic policy, etc.
Table 3 - SWOT analysis of the Kursk region
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Capabilities | |||
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Introduction of innovative technologies. Involvement in the work of unused production capacities. Possibility of additional development of small business, provision of guarantees to small enterprises. Output of products of individual industries (metallurgy, engineering) to the world market. Diversification of the economy. Diversification, increasing the effectiveness of social policy. Increasing the investment attractiveness of the region. Improving the efficiency of the banking system. Increasing the efficiency of the use of the resource and raw material base. Improving the efficiency of using agricultural resources. Increasing the efficiency of the education system Attracting investments in the social sphere Development (implementation) of a quality management system at leading enterprises. Development of communication systems (transport, roads, communications). Development of a system of institutions for paid personal services. Development of technopark structures. Growth of scientific and technical potential. Cooperation with foreign countries(Euroregions). Cooperation with neighboring regions Increasing the output of individual enterprises. Increase in the share of government orders. Increasing the share of financial assistance from the federal budget Increasing investment in the regional economy. Improving health system performance. Improving the level and quality of life of the population. Improving the business climate. Improving the economic situation across the country. |
Deterioration of relations with neighboring regions. Increased competition between regions (for example, in the field of investment). Population decline. Lagging behind in the socio-economic development of the region. Rising inflation rates. Growth of competition among the products of the enterprises of the region. Russia's entry into the WTO. Increase in the cost of housing and communal services and the energy sector. Increasing dependence on the state budget. Deterioration of the ecological situation. Rising house prices Decreased food quality. Lack of competition in the HCS sector. Declining level (quality) of education Increasing the cost of educational services Increasing the cost of health care Declining quality of medical services |
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Weak sides |
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Budget surplus (since 2000). GDP growth. Development of the banking services market. Steady trend of growth in foreign trade turnover. Favorable geographical location of the region. High competitiveness of products of enterprises. Developed infrastructure (by type). Education system (quality, accessibility) Favorable natural conditions. Reserves of natural resources Historical and cultural potential (tourism). Potential of fertile chernozem soils. Energy supply (availability of energy system reserves). High level of industrial development The presence of a diversified processing complex. High standard of living of the population High intellectual and scientific and technical potential Innovative development of mechanical engineering, chemical and food industries. Sustainable development of the main budget-forming entities (Mikhailovsky GOK, Kursk NPP). sustainable social development |
Insufficient number of banks, financial and credit institutions. Deteriorating demographic situation (low birth rate, high death rate). A high proportion of unprofitable enterprises and the poor state of housing and communal services. Poor quality of socially significant services. Significant structural and dynamic instability of the socio-economic situation. The discrepancy between the real development of the region's economy and its capabilities. A large proportion of the unemployed in the total population of the region. Slow development of innovations. Insufficient level of development of tourist infrastructure. Low income level of the population Territorial disproportions of economic development. Territorial disproportions of social development Asymmetry in the development of municipalities Deteriorating environmental situation Flaw financial resources for development with a weak level of development of market infrastructure Insufficient competitiveness of products, goods and services of commodity producers of the region in the domestic and foreign markets Insufficient territorial differentiation of small business development Low investment attractiveness Low level of diversification industries, agriculture, small business Imperfection of the regulatory and legal framework |
Table 4 - Summarizing the results of the SWOT analysis
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Strengths |
Favorable geographical position Landscape Land suitable for investment Significant material resources High level of entrepreneurship of citizens Cultural heritage, museums, etc. Economic, scientific and intellectual potential |
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Weak sides |
Poor condition of technical infrastructure, transport, telecommunications and municipal services |
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Opportunities |
Economic recovery in the country and in the world (including industries related to the profile of the city) Road construction Attractiveness for investors Regional integration |
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Adverse Opportunities |
Separatism in planning the development of the agglomeration and the region Reducing the autonomy of the municipal level Competition from other centers Legislative instability |
It should be noted that the strengthening of economic and social trends is hampered by a number of threats and problems associated with the fact that the dynamics of market expansion and the scale of economic processes are developing faster than technological, financial, and human factors today. The region also has a number of unfavorable (weak) sides, for example: a decrease in the population, the still insufficient level of external investment flows and internal financial resources, the slow development of innovative industries, asymmetric development, low incomes of the population, etc. a number of threats: increased competition in interregional development, a decrease in product quality due to a decrease in its cost, a budget deficit, an increase in the cost of social services with a simultaneous decrease in their quality.
The leadership of the region needs to correctly work out the main problems and prospects of the region, compare them and, based on the result obtained, try to find ways to solve difficult situations.
Sverdlov P.A*.
