Strategy Formulating Tools

Strategy is formulated from internal and external analysis and can be summed up in a SWOT, where the Strengths and Weaknesses come from the internal
analysis and the Opportunities and Threats come from the external analyses

The key question: How are internal resources and competence customised to external opportunities and threats?

Internal Analysis

o Business model and value creation (what are the customers buying and how do we create value for the customers?)
Generic approach;
- Low cost/price
- Specialisation in selected niches
- Focus (branding, marketing, location, etc)

o The value chain with core competence and supporting competence. Where are we strong and where do we need to improve.
- Product/service
- Distribution
- Technology including R&D and intangible rights
- Marketing and sales
- Management and people, including dynamic capabilities

o Resources by VRIO;
- Valuable
- Rear
- Imitable
- Organised well.
External Analysis

o Relative strengths based on the five-factor analysis;

- Competitors
- Suppliers
- Customers
- Alternative products and services
- Potential entrances (including barriers for market entry)

o External factors - PESTEL;

- Political
- Economic
- Social-Cultural
- Technological
- Environmental
- Legal

o Expansion - Ansoff Matrix (the higher score, the higher risk)

1. Market penetration, existing products/services in existing markets
2. Market development, existing products/services in new markets
3. Product development, new products/services in existing markets
4. Diversification, new products/services in new markets