What is Strategic Audit?

A strategic audit is an in-depth review to determine whether a company is meeting its

organizational objectives in the most efficient way. Additionally, it examines whether the company
is utilizing its resources fully. A successful strategic audit is beneficial to any company.

Strategic audit helps corporate governance in some ways. Firstly, it aids in the detection of fraud.
Fraud can affect the corporate image of an organization, and therefore, a strategic audit helps in
detection the fraudulent activities. Secondly, it enables the high-risk areas to receive the most
attention, and this enables the objectives of corporate governance to be met. Thirdly, it also ensures
that the controls and corporate processes are functioning effectively. Furthermore, the strategic
audit can determine whether a corporation process can be improved or enhanced, which is cost-
effective for the organization or company.

Strategic Analysis is:

‘… the process of conducting research on the business environment within which an organization
operates and on the organization itself, in order to formulate strategy.’ BNET Business Dictionary
‘… a theoretically informed understanding of the environment in which an organization is
operating, together with an understanding of the organization’s interaction with its environment in
order to improve organizational efficiency and effectiveness by increasing the organization’s
capacity to deploy and redeploy its resources intelligently.’ Professor Les Worrall, Wolverhampton
Business School

Definitions of strategic analysis often differ, but the following attributes are commonly associated
with it:
1. Identification and evaluation of data relevant to strategy formulation
2. Definition of the external and internal environment to be analyzed.
3. A range of analytical methods that can be employed in the analysis.

Stages of Strategic Management

Strategy Formulation includes developing a vision and mission, identifying an organization’s

external opportunities and threats, determining internal strengths and weaknesses, establishing
long-term objectives, generating alternative strategies, and choosing particular strategies to pursue.
Strategy-formulation issues include deciding what new businesses to enter, what businesses to
abandon, how to allocate resources, whether to expand operation or diversify, whether to enter
international markets, etc.

Strategy Implementation requires a firm to establish annual objectives, devise policies, motivate
employees, and allocate resources so that formulated strategy can be executed. Strategy
implementation includes developing a strategy-supportive culture, creating an effective
organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing
information systems, and linking employee compensation to organizational performance. Strategy
implementation is often called the “Action stage” of strategic management. Implementing strategy
means mobilizing employees and managers to put formulated strategies into action.

Strategy Evaluation is the final stage in strategic management. Managers desperately need to know
when particular strategies are not working well; strategy evaluation is the primary means for
obtaining this information. All strategies are subject to future modification because internal and
external factors are constantly changing.

Sustainability and Strategic Audit pg. 1

Competitive Advantage
Strategic Management is all about gaining and maintaining competitive advantage. This
term can be defined as “anything that a firm does especially well compared to rival firms.” When a
firm can do something that rival firms cannot do, or owns something that rival firms desire, that can
represent a competitive advantage. Normally, a firm can sustain a competitive advantage for only a
certain period due to rival firms imitating and undermining that advantage. Thus it is not adequate
to simply obtain competitive advantage. A firm must strive to achieve sustained competitive
advantage by continually adapting to changes in external trends and events and internal
capabilities, competencies and resources; and by effectively formulating, implementing and
evaluating strategies that capitalize upon those factors.

Benefits of Strategic Management

Strategic Management allows an organization to be more proactive rather than reactive in shaping
its own future; it allows an organization to initiate and influence (rather than just respond to)
activities – and thus to exert control over its own destiny.

Financial Benefits
Research indicates the organizations using strategic-management concepts are more
profitable and successful than those who do not. Business using strategic-management concepts
show significant improvement in sales, profitability, and productivity compared to firms without
systematic planning activities. High-performing firms tend to do systematic planning to prepare for
future fluctuations in their external and internal environments. Firms with planning systems more
closely resembling strategic-management theory generally exhibit superior long-term financial
performance relative to their industry.

Nonfinancial Benefits
Besides helping firms avoid financial demise, strategic management offers other tangible
benefits such as an enhanced awareness of external threats, an improved understanding of
competitors’ strategies, increased employee productivity, reduced resistance to change, and a
clearer understanding of performance-reward relationships. Strategic management enhances the
problem-prevention capabilities of organizations because it promotes interaction among managers
at all divisional and functional levels. Firms that have nurtured their managers and employees,
shared organizational objectives with them, empowered them to help improve the product or
service, and recognized their contributions can turn to them for help in a pinch because of this
interaction.

A Look at the Business Vision and Mission

Vision Statement
Many organizations today develop a vision statement that answers the question “What do
we want to become?” developing a vision statement is often considered the first step in strategic
planning, preceding even development of a mission statement. Many vision statements are a single
sentence. For example, the vision of Stokes Eye Clinic in Florence, South Carolina, is “Our vision is to
take care of your vision.”

What Do We Want to Become?

Sustainability and Strategic Audit pg. 2

 It is especially important for managers and executives in any organization to agree upon the
basic vision that the firm strives to achieve in the long term. A vision statement should answer the
basic question, “What do we want to become?” A clear vision provides the foundation for
developing a comprehensive mission statement. Many organizations have both a vision and mission
statement, but the vision statement should be established first and foremost. The vision statement
short be short, preferably one sentence, and as many managers as possible should have input into
developing the statement.

Mission Statements

Mission statements are “enduring statements of purpose that distinguish one business from other
similar firms. A mission statement identifies the scope of a firm’s operations in product and market
terms.” It addresses the basic question that faces all strategists: “What is our business?” A clear
mission statement describes the values and priorities of an organization.

What Is Our Business?

Peter Drucker says that asking the question, “What is our business?” is synonymous with
asking the question “What is our mission?” An enduring statement of purpose that distinguishes
one organization from other similar enterprises, the mission statement is a declaration of an
organization’s reason for being. It answers the pivotal question “What is our business?” A clear
mission statement is essential for effectively establishing objectives and formulating strategies.
Sometimes called a creed statement, a statement of purpose, a statement of philosophy, a
statement of beliefs, a statement of business principles, or a statement “defining our business,” a
mission statement reveals what an organization wants to be and whom it wants to serve. All
organizations have a reason for being even if strategists have not consciously transformed this
reason into writing.

Importance of Vision and Mission Statements:

1. To ensure unanimity of purpose within the organization.
2. To provide a basis, or standard, for allocating organizational resources.
3. To establish a general tone or organizational climate.
4. To serve as a focal point for individuals to identify with the organization’s purpose and
direction, and to deter those who cannot from participating further in the organization’s
activities.
5. To facilitate the translation of objectives into a work structure involving the assignment of
tasks to responsible elements within the organization.
6. To specify organizational purposes and then to translate these purposes into objectives in
such a way that cost, time and performance parameters can be assessed and controlled.

Mission Statement Components:

1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees

Sustainability and Strategic Audit pg. 3

 The Bellevue Hospital
Vision Statement
The Bellevue Hospital is the LEADER in providing resources necessary to realize the
community’s highest level of HEALTH throughout life.

Mission Statement
The Bellevue Hospital, with respect, compassion, integrity and courage, honors the
individuality and confidentiality of our patients, employees, and community, and is progressive in
anticipating and providing future health care services.

Sustainability and Strategic Audit pg. 4