​Strategic analysis tools

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The downfall and success of a company are closely connected to how the strategies and strategic tools are improved and executed. Accordingly, strategic involvement and execution has become the influential responsibility for the service industry managers of any company. Strategy involvement is about analyzing existing and wished status and then resolving the most productive means to succeed the objectives. The strategy formulation is a difficult process which needs adopting strategic tools to identify the external factors and to compare these external factors with the internal capabilities of the company. That is why, strategic analysis has become an essential agenda in any business administration curriculum.

There are many different tools in strategic analysis, for example,  balanced scorecard, blue ocean strategy, environment analysis, Porter’s five forces, P.E.S.T.E.L analysis and so on.There are casual problems when relying on the use of a singular strategic tool, hence the combined and mixed use of various strategic tools such as balanced scorecard, blue ocean strategy and environment analysis could be more practical, comprehensive and systematic approach to understand the company position in the business environment. How helpful could be such strategic tools as environmental analysis, blue ocean and balanced scorecard can be assisted for understanding of the dynamic business environment by service industry managers? This cheap essay writing will address each of these tools for answering below.

How can company use environment analysis to its business advantage?

Environmental analysis is a strategic tool that starts from recognition of environmental factors, estimating their nature and impact, auditing them to find their influence to the business, and making many profiles for positioning. A service industry manager should be able to make an analysis of the business environment to understand opportunities or face the threats. Companies need to make strength and fix their weakness available in the business environment. As a result, this process consists not only a single steps but a process of many steps.

Environmental analysis includes performing a scan, supervision, analyzing, and foreseeing the business situation. Performing a scan is to get the relevant data from the information overload, it is to concern on the most relevant information.
Supervision is to check the nature of the business environmental factors. Analyzing needs information collection and use of different necessary tools and techniques.
Foreseeing is to find the coming possibilities based on the past results and current scenario.  

Environmental analysis is not static but a dynamic procedure; it may differ relying on the situation. Environmental analysis is helpful because it develops from the advance of strategic planning, leads to increased communication. Therefore, environmental analysis tool can be assist service industry managers in their understanding of the dynamic business environment because it focuses on:

Communications and building a culture based on a deeper consciousness of what is most important to company future success;

Avoid making unintended awareness and unanticipated results that pretend capacity, resources and momentum;

Visually create the mental foundation indispensable to see the business dynamically, including company alternatives and the implications of company’s actions.

Which processes does the balanced scorecard apply to understanding business environment?

The balanced scorecard is a tool to guide strategy planning, execution and communication. Balanced scorecard assists service industry managers in tracking the execution and providing fast feedback to top-executives for control and evaluation. A company cannot be successful in business environment without a strategy and a strategic planning process. The balanced scorecard is a system of mixing financial and non-financial measures of execution in one single scorecard. It embraces execution measures for four key points: financial, customer, inner business processes and development. It need not be limited to four key points; more may be attached social responsibility and environmental concerns are two potential candidates. The balanced scorecard is a strategic management system which enabling companies to change their missions, values, images and strategies into groups of execution measures that fit inside four domains.

By selecting and embracing appropriate execution measures that reflect particular departments’ strategies, companies may gain a competitive advantage in dynamic business environment. The balanced scorecard emphasizes the significance of ensuring that execution measures are clear to all concerned and are used by persons with similar roles to guarantee that the criteria are clarified in the same way.  The balanced scorecard is a strategic tool, not a

ready-made execution indicator. To perform the scheme successfully, it is necessary to improve the balanced scorecard key points carefully with information designed to measure the factors necessary to develop its vision and strategy.
The balanced scorecard could assist to understand dynamic business environment, successfully carrying out an integrated balanced scorecard should anticipate the following profits:

Better management understanding of the linkages between particular organizationaldecisions and processes and the chosen strategic goals;

A redesignation of relationships with customers;

Reengineering of basic business processes;

The emergence of a new corporate culture emphasizing team attempt amid company functions to implement the company’s strategy.

How blue ocean strategy may assist to understand what business environment company could choose in the future?

Blue ocean strategy aims to assist companies create uncontested business environment and to make the competition impertinent. Modern overcrowded industries, competing head-on resulted in a “red ocean’ of competitors fighting over a reducing profit pool. To differentiate their production, service industry need to be innovative to meet conscious and unconscious customer needs. The “ocean” directs to the business environment. Blue oceans are uncontested industries, which provide small or no competition for company which would dive in, since the industry are not crowded. A “red ocean”, on the other hand, directs to a completely soaked industry where there is fierce competition, already crowded with companies giving the same type of services or manufacturing the same kind of goods. A basic concept is that the innovation must raise and make value for the industry, while simultaneously dropping or eliminating goods or services that are less valued by the current or future industry. While main companies opposite to this “red oceans”, red ocean strategy is fitting dissimilar to make profitable increase in the future.
​Blue ocean is a strategic tool to visually emphasize the values of key features amid most of competitors. Blue ocean tool can assists service industry managers in that way:

Decrease factors that are well below the market’s standard;

Remove factors that the market takes for granted;

Increase factors that are well above the market’s standard;

Make factors that are new to the market.

How the   five forces strategic tool may assist to examine the potential profit in a particular industry?

The economic framework of any industry is not a coincidence. Its complexities are the consequence of long-term social, political and environmental trends and  economic laws. Its effects on company and service industry managers are immediate because it regulates the competitive rules and strategies companies are likely to use. Learning about that structure will give important insight for company strategy. Michael Porter has established five competitive forces that are extensively used as a tool for estimation the structure of an industry.

According to W.Charles (Charles, 2009), Porter’s five competitive forces are the:

To determine the important structural qualities of any industry via the Porter’s five forces, service industry managers conduct an industry analysis that responses the question, “What are the basis factors for competitive success?” Understanding of these primary reasons of competitive pressure gives the preliminary work for a strategic plan of actions to service industry managers. They emphasize the critical strengths and weaknesses of the company, animate the company’s position in business environment and clarify the areas where the strategic changes may be able to archive long-term success. Understanding of Porter’s 5 Forces tool can be assisted industry service managers provides a number of advantages, which can be summarized as:

Determine the scope of the business environment to be analyzed, but not too narrow so as to loss essential factors;

Establish and analyze all relevant forces for business environment;

Inspect current and potential future states of the five competitive forces;

Recognize options to influence the forces in company’s interest;

Curtail the power of competitive forces.

How P.E.S.T.E.L. analysis can be assisted service industry managers for investigating the dynamic business environment?

A P.E.S.T.E.L. analysis is a strategic tool which used in the process of strategic planning to observe the external environment affecting a current and future business environment. According to D.Yeates (Yeates, 2004), the P.E.S.T.E.L.  analysis surveys this through a broad level of factors and stands for:

P – Political environment

E – Economic environment

S – Social & consumer Trends

T – Technological & scientific environment

E – Environmental & Green trends

L – Legal & Regulatory Environment

P.E.S.T.E.L. analysis is a practical, effective tool for investigating the dynamic business environment. The central statement of P.E.S.T.E.L. analysis is that evidently small changes in the business environment can have a profound impact on the company. When P.E.S.T.E.L. analysis merged with other strategic tools, it enables service industry managers to build on their business’s strengths, and to determine and defend any weaknesses. The central statement of P.E.S.T.E.L. analysis is that evidently small changes in the business environment can have a profound impact on the company. Understanding of P.E.S.T.E.L. analysis can be assisted industry service managers to:

Distinguish and shape the questions most important to the future of the company;

Gather and synthesize the relevant knowledge peculiar in the business to consider the future, and understand the order of implications in the company;

This essay has been focused on illustrate how three powerful strategic tools, environmental analysis, blue ocean strategy and balanced scorecard have been fused for understanding how these tools can be assisted service industry managers. The balanced scorecard in its four key points (financial, customer, inner business processes and development) provides a framework to decide key performance indicators which is used to observe strategic execution. The environmental analysis findings may promote planning and to give an opportunity for the management team to critically survey the dynamic business environment. This tool helps to generate concentration on the value adding activities.   Blue ocean strategy should be adopted when crisis or major problem appears and the company needs to search for innovative concepts. Usage of these strategic tools is a suitable way for the management team to rethink their positions in business environment.