Strategic Analysis Tools

Business Strategy Tools

There are many different strategic analysis tools that managers can use. “Strategic analysis is when research is done on a business environment to understand how an organization operates and to formulate a strategy to have a successful business” (Podeswa 2009). The type of analysis tool used is based upon the type of organization and what they are wanting to accomplish.

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Business Process Modeling/Business process diagram

The first tool I would like to discuss is the business process diagram or business process modeling. Business process modeling is used to improve an organization or prepare the organization for an IT project. Documentation for this type of tool are diagrams, text documentation, and metrics. “The purpose of business process modeling is to improve efficiency, account for new circumstances and gain a competitive advantage” (Semenchuk, 2017).

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Pros and Cons

Pros to using business process modeling include being able to spot tasks that seem repetitive and get rid of them. It can increase the efficiency of the process, by finding areas that get held up in work. Lastly, it makes it easier to be sure that efficient processes are done the same way every time. The cons of using this tool is that it can take a great deal of time and energy. If not done or used correctly, it can become confusing trying to get to the end goal.

Companies need to gain an advantage over the other companies by improving their sales and profits. They need to first clearly define their process from beginning to end, which would be to gain a competitive advantage over the other companies in the low-tech segment by increasing labor cost, decreasing material cost and increasing the price of the sensors by a small amount. They also need to try to gain a small advantage into the high-tech segment, to increase sales and profits, by gaining new consumers. It will help to improve on sales and profits.

Example

Root-Cause Analysis

The second tool I would like to discuss is the Root-Cause Analysis. “A root-cause analysis is used to determine why a problem is happening. Typically, the person doing the analysis will determine what happened and why” (ASQ 2018)They will also come up with a solution for the problem, to lower the probabilities of the problem occurring again. There are typically three types of causes, physical, human, and organizational.

Pros and Cons

Pros of using the root-cause analysis tool is that it can improve systems used to decrease the source of the problem. It is cost efficient and productive. Lastly, the end results will last longer. Cons of using this tool is that it can take more time, effort, and money.

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Cost and Differentiation Strategy

Advantages of differentiation strategy is that it provides a variety of products in the market. It can also enhance creativity by inventing new product types and having unique products can give a company an advantage. Disadvantages are that it can become expensive creating a new product, having to do research for the market type, to launch the new product, and to advertise the new product. Lastly, it can hinder new businesses from entering the new market. This can be a good thing for established business’s because they gain all the sales and profits, but it can be bad because they don’t have other business’s competition to push them to be better. The advantage of using cost strategy, is that it can make it more difficult for competition to enter the market. Disadvantages is that it makes the organization must cut costs, consumers can be swayed easily to another company, and it does not allow time for research.

Managers and leaders have many different options to choose from, when deciding what strategic analysis tools to use. The choice it going to rely on the type of market the organization is in and what the end goal or result the organization is wanting and what is needing to be analyzed. To be successful managers and leaders should know the different types of tools used and how to use them and to be thorough on their analysis.

References

ASQ. (2018). What is root-cause analysis (RCA)? Retrieved from:

asq.org/learn-about-quality/root-cause-analysis/overview/overview.html.

Podeswa, H. (2009). The business analyst’s handbook. [Books 24X7 version] Retrieved from:

http://common.books24X7.com.libauth.purdueglobal.edu/toc.aspx?.

Semenchuk, M. (2017 June 9). Using BPMN diagrams: pros and cons. Retrieved from:

https://medium.com/practical-blockchain/benefits-of-bpmn-b154904e7468.

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Daniel Fortune

Daniel Fortune is a successful business professional, entrepreneur, father, and lover of travel.

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