Strategic

Business
Analysis:
Strategic
BSA - 3rd Year Thinking
INTRODUCTIO
Strategic thinking is crucial for a
N
growing entrepreneurial company
to gain a competitive advantage. It
involves generating unique
business insights and
opportunities to create a
competitive advantage. Managers
must always think long-term to set
targets and goals, and collaborate
with others to gain insights into
complex issues.

Management accountants play a

unique role in strategic
Emerging Factors Affecting
Strategic Analysis
Strategic analysis is a crucial process for
organizations to develop strategies,
considering factors like sustainability,
change speed, long-term value creation, and
organizational culture. It's essential to avoid
short-termism and align long-term value
drivers to achieve sustainable value
creation. Investors should understand a
company's long-term value-creating
strategy. Organizational changes and
 Strategic Analysis Tools and
Frameworks Environmental
Scan and
0 Competitive
Analysis
1 • Porter’s Five Forces
• STEEP Analysis
• Scenario Planning
• Strategic Risk Management
The tools and Internal/ External
frameworks Strategic Analysis
• SWOT Analysis
discussed in the 0 • Value Chain Analysis
SMA are grouped 2 • Strategy Maps
into three • Gap Analysis
categories: • Good to Great’s Hedgehog concept
• Return Driven Strategy
Innovation, Change and
0 Market Disruption
• Blue Ocean strategy
3 • Creating shared value
• Disruptive innovation
• Reverse innovation
 Environmental Scan and
Competitive Analysis:
0 0 0
Porter’s 5 1 2 3
forces
Identify potential
market threats to a Competitive
Supplier Power Buyer Power
company’s value Rivalry
proposition.
0 0
According to Porter, 4 5
there are five forces
that represent the key
sources of competitive
pressure within an Threat of Threat of New
industry They are: Substitution Entry
 Environmental Scan and
Competitive Analysis:
Porter’s 5 Competitive
0
forces 1 Rivalry
The first of Porter's Five Forces looks at the
Identify potential number and strength of your competitors.
market threats to a Consider how many rivals you have, who they
company’s value are, and how the quality of their product
proposition. compares with yours.

According to Porter, In an industry where rivalry is intense,

companies attract customers by cutting
there are five forces
prices aggressively and launching high-
that represent the key impact marketing campaigns. This can make
sources of competitive it easy for suppliers and buyers to go
pressure within an elsewhere if they feel that they're not getting
industry They are: a good deal from you.
 Environmental Scan and
Competitive Analysis:
Porter’s 5
0
forces Supplier Power
2 Suppliers gain power if they can
Identify potential increase their prices easily, or reduce
market threats to a the quality of their product. If your
company’s value suppliers are the only ones who can
proposition. supply a particular service, then they
have considerable supplier power.
According to Porter, Even if you can switch suppliers, you
there are five forces need to consider how expensive it
that represent the key would be to do so.
sources of competitive
pressure within an
industry They are:
 Environmental Scan and
Competitive Analysis:
Porter’s 5
0
forces Buyer Power
3
Identify potential If the number of buyers is low compared to
market threats to a the number of suppliers in an industry, then
company’s value they have what's known as "buyer power."
This means they may find it easy to switch to
proposition.
new, cheaper competitors, which can
ultimately drive down prices.
According to Porter,
there are five forces
that represent the key
sources of competitive
pressure within an
industry They are:
 Environmental Scan and
Competitive Analysis:
Porter’s 5 Threat of
0
forces 4 Substitution
Identify potential This refers to the likelihood of your customers
market threats to a finding a different way of doing what you do.
company’s value It could be cheaper, or better, or both. The
proposition. threat of substitution rises when customers
find it easy to switch to another product, or
when a new and desirable product enters the
According to Porter, market unexpectedly.
there are five forces
that represent the key
sources of competitive
pressure within an
industry They are:
 Environmental Scan and
Competitive Analysis:
Porter’s 5 Threat of New
0
forces 5 Entry
Identify potential Your position can be affected by potential
market threats to a rivals' ability to enter your market. If it takes
company’s value little money and effort to enter your market
proposition. and compete effectively, or if you have little
protection for your key technologies, then
rivals can quickly enter your market and
According to Porter, weaken your position.
there are five forces
that represent the key
sources of competitive
pressure within an
industry They are:
 Environmental Scan and
Competitive Analysis:

STEEP ANALYSIS

Identify nonmarket trends and issues relating to the general social,

economic, and political environment.

STEEP analysis is a framework for assessing how Social,

Technological, Economic, Environmental, and Political external
factors affect a business. It's a strategic planning tool used by
business and project managers to help them make better decisions.
 Environmental Scan and
Competitive Analysis:

Scenario planning
- Stimulate creative thinking to better prepare for
potential scenarios.
Strategic risk management
- Assess and manage the strategic risks as part of the
strategic planning and strategic management process.
 Internal/ External Strategic
Analysis
SWOT Analysis

W Match market opportunities with

internal capabilities.

S O SWOT stands for Strengths,

Weaknesses, Opportunities, and
Threats, and so a SWOT analysis is a

T technique for assessing these four

aspects of your business.
 Internal/ External Strategic
Analysis
Value Chain Analysis Good to Great’s
Hedgehog Conccept
- Identify unique value
propositions. - Desccribe the unique value
Strategy Maps proposition of a company.
- Develop and articulate the
strategy of an organization in a Return Driven Strategy
simple visual form.
- Assess how well strategies are
Gap Analysis aligned with ethically creating long-
term sustainable value.
- Highlight where an organization
desires to be on one of its goals
and where it will be if no changes
are made.
 Innovation, Change and Market
Disruption
Blue Ocean strategy Disruptive Innovation
- Create an entirely new - Disrupt the market by making
uncontested market space. something unique that creates
new value for customers and the
company.

Creating shared value Reverse Innovation

- Create economic value that - Innovate in a developing country
also creates value for society. and later sell the product in more
developed countries.
Strategy
- general plan of action for achieving one’s
goals and objectives.

A strategy or general plan of action might

be formulated:

-for broad, long-term, corporate goals and

objectives
-for more specific business unit goals and
objectives or
-for a functional unit, even one as small as a
cost center
 Alfred D. Chandler, Robert N. Anthony
Jr.
- author of Strategy and - author of Planning and Control
Structure (1962) Systems (1965)

-the pattern of objectives, purposes

- the determination of the or goals and major policies and
basic long-term goals and plans for achieving these goals
objectives of an enterprise, stated in such a way as to define
and the adoption of course of what business the company is or is
action and the allocation of to be in and the kind of company it
 Michael Porter Henry Mintzberg

- well know by his published - an iconoclastic professor fo

1980 book, Competitive management at McGill
Strategy University in 1994

-a broad formula for how a -it is a plan, a pattern, a

business is going to compete, position, a perspective and, in
what it's goal should be, and a footnote, he indicated that it
what, policies will be can be a ploy, a maneuver
Strategic
- “of or having to do with Needles to say, the scope
strategy" and scale of our plans,
- of great significance or thinking, and managerial
import” activity varies. At least
three levels of strategy
and planning are widely
Plans and Planning
accepted;
Two Fundamental Aspects:
• enterprise level
what is to be achieved
• business unit level
and;
• functional level
how it is to be achieved
Maybe one of them, can
and should find strategic
Planning
- the activity of preparing a plan.
- it can be formal or informal and it involve a
lot of documentation or very little.

Plan
- is a set of intended outcomes (ends)
coupled with the actions which those
outcomes are to be achieved (means).
Strategic Planning
- Long-term (usually 5-10 years)
- Focuses on future achievements and conditions
- Weighs a series of alternatives before making
fundamental choices
- Usually integrates several functions, levels,
components simultaneously
- Integrates strategies for resourcce mobilization with
activities (sustainability plans)
- Usually requires ratification from governing structures
- recognizable set of activities.
 Differences between Strategic and
Operational Planning
Strategic Planning Operational Planning

✔ Long-term (usually 5-10 years) ✔ Short-term (1 year or less)

✔ Focuses on future achievements and ✔ Achievements or targets annual
conditions ✔ Planned activities represent choices
✔ Weighs a series of alternatives before already made; alternatives are not
making fundamental choices considered
✔ Usually integrates several functions, levels, ✔ Tend to focus on one unit or related set of
components simultaneously activities
✔ Integrates strategies for resourcce ✔ Resources for implementation usually
mobilization with activities (sustainability already identified
plans) ✔ No formal acction or ratification
✔ Usually requires ratification from governing
Strategic Thinking and Management
Strategic thinking, planning, and management are
crucial for developing and executing a strategic plan.
However, the goal is to think and manage strategically,
not just to engage in strategic planning for its own sake.
The differences between these terms are often unclear,
but the main point is to focus on the essence of
strategic planning, not just its form.
 The “Nested” Concepts Related to Strategy
Nested concept is a vehicle to communicate the vision throughout an organization. By
insuring that the assigned purposes in the concept of operations support the
commanders intent, nested concepts secures unity of effort.

Strategic
Thinking
Strategic
Management

Strategy Strategic Strategy

Formulatio Planning Deploymen
n t
Role of Management Accountant in Strategic Management

When management accounting professionals have the necessary skills and

abilities, they can create value in various leadership roles using strategic analysis,
including:

• Helping to develop innovation and growth strategies.

• Reviewing and refining strategies to create greater long-term sustainable value.
• Analyzing where the company or business units are in the competitive life
cycle.
• Communicating the strategy within the company and to the board of directors.
• Developing information for investor relations presentations by the CFO.
• Evaluating merger and acquisition (M&A) opportunities and risks.
• Assessing strategic risks of the organization.
Conclusion
Strategy is a valuable concept, and strategic planning is
a helpful tool for managing a business. However,
thinking and managing strategically are also crucial
responsibilities for senior managers. These elements
are important but not enough on their own, because
most businesses need to focus on their existing
operations, which usually make up about 80% of their
activities. While strategic issues are vital and take up
much of top management's time, they only use about
20% of the organization's resources.

To paraphrase an old saw, "The strategy wheel gets the

executive grease." This is as it should be. Senior
management should focus on the strategic issues, on
the important issues facing the business as a whole,
including where it is headed and what it will or should
become. Others can "mind the store."