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Unit 9: Strategic Analysis and Choice
These tools use the information provided by the input stage and help the strategists to match Notes
external opportunities and threats with internal strengths and weaknesses.
Example: If a firm that has an internal weakness of insufficient capacity has to tap an
external opportunity caused by the exit of two major foreign competitors from the industry; it
may pursue horizontal integration by buying competitor’s facilities.
The other matrices are explained in the section “Portfolio Analysis” of this unit.
Decision Stage
The matching techniques discussed above reveal feasible alternative strategies, which need to
be examined and appropriate strategies selected for implementation. With the help of techniques
like QSPM (Quantitative Strategic Planning Model) the strategies can be prioritised so that the
best strategies could be chosen.
QSPM is explained in the “Portfolio Analysis” section of this unit.
9.3 Industry Analysis
The basic purpose of industry analysis is to assess the strengths and weaknesses of a firm
relative to its competitors in the industry. It tries to highlight the structural realities of particular
industry and the extent of competition within that industry. Through industry analysis, an
organisation can find whether the chosen field is attractive or not and assess its own position
within the industry.
Importance of Industry Analysis
Macro environment is common to all industries. It remotely affects the industry. It is the structural
realities of the specific industry and the nature and intensity of competition unique to that
industry that are of special relevance to the firm in formulating strategy.
!
Caution Industry structure, industry boundaries and industry attractiveness are essential
for conducting an environmental survey. With industry and competition analysis, the
firm actually gets into the study of proximate environment.
Factors that more directly influence a firm’s prospects originate in the environment of its industry.
Good industry and competitive analysis is a pre-requisite to good strategy making. A competently
done analysis tells a clear, easily understood story about the company’s environment needed
for shrewdly matching strategy to the company’s external situation.
The importance of industry analysis can thus be summarised as follows.
1. Industry – related factors have a more direct impact on the firm than the general
environment.
2. An industry’s dominant economic characteristics are important because of their implication
for crafting strategy.
3. Industry analysis reveals industry attractiveness and its prospects for growth.
4. It helps the firm to identify such aspects as:
(a) Current size of the industry
(b) Product offerings
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