A Framework for Comprehensive Strategic Analysis

A FRAMEWORK FOR COMPREHENSIVE STRATEGIC ANALYSIS

ANTHONY E. BOARDMAN
Van Dusen Professor of Strategy
Faculty of Commerce
University of British Columbia

and

AIDAN R. VINING
CNABS Professor of Business & Government Relations
Faculty of Business Administration
Simon Fraser University

June 10, 2003

1

INTRODUCTION: THE STRATEGIC ANALYSIS FRAMEWORK
This paper presents the basic framework for comprehensive strategic analysis. The basic purpose of strategic analysis is to help analyze how the firm can generate returns in excess of the firm’s opportunity costs (these are rents) by engaging in a more effective corporate strategy and, at the business level, more effective competitive strategy (Porter, 1996).
The framework describes and briefly explains the major components of a strategic analysis, and outlines the major components of strategic analysis and the order they should be covered in a project write-up.

It consists, therefore, of a coherent “skeleton” of a comprehensive strategic

analysis. Of course, it is only a generic guide. A project should be adapted to the specific needs (i.e., the project specification) of the client. Corporate-level analysis for firms with multiple business units is more complex than an analysis of firms in a single line of business. Some projects are more oriented to an industry analysis (a potential client for this type of analysis might be a firm considering entering the industry). Other projects are essentially analysis of entry into a new market or (new) business plans (see business plan power point slides).
The logic of a comprehensive strategic analysis is simple: describe and explain the issue/problem, assess it, try to solve it. Of course, we actually analyze p roblems in a much more nonlinear manner than this in practice, but writing-up a n analysis in this linear, “rational” mode is the only way to make the analysis understandable to the client.

Therefore, usually, a written

References: Agarwal, Rajshree and Michael Gort, First-Mover Advantage and the Speed of Competitive Entry,” Journal of Law and Economics, 4 4(1): 161-177, 2001 20(4): 413-427, 1994. Andrade, Gregor, Mark Mitchell and Erik Stafford, “New Evidence and Perspectives on Mergers,” Journal of Economic Perspectives, 1 5(2): 103-120, 2001. Argote, Linda, “Organizational Learning Curves: Persistence, Transfer and Turnover,” International Journal of Technology Management, 11(7/8): 759-70, 1996. Auty, Susan and Geoff Easton, “Patterns of Competition: A Study of Local Restaurants,” Marketing Intelligence & Planning, 8(1): 27-34, 1990. Banker, Rajiv D., His-Hui Chang and Sumit K. Majumber, “A Framework for Analyzing Changes in Strategic Performance,” Strategic Management Journal, 1 7(9): 693-712, 1996. Benjamin, Robert and Rolf Wigand, “Electronic Markets and Virtual Value Chains on the Information Superhighway,” Sloan Management Review, 3 6(2): 62-72, 1995. Bergen, Mark and Margaret A. Peteraf, “Competitor Identification and Competitor Analysis: A Broad-Based Managerial Approach,” Managerial and Decision Economics, 23(4/5): 157-169, 2002. Boardman, Anthony E. and Aidan R. Vining, “Using Service-Customer Matrices in Strategy Analysis of Nonprofits,” Nonprofit Management & Leadership, 1 0(4): 397-420, 2000. Boardman, Anthony E. and Aidan R. Vining, “Defining Your Business Using Product-Customer Matrices,” L ong Range Planning, 2 9(1): 38-48, 1996. Competence-based Competition, New York: John Wiley & Sons, 1994. Brickley, James A., Clifford W. Smith and Jerold L. Zimmerman, Managerial Economics and Organizational Architecture, New York: Irwin, 1996. Capon, Noel, John U. Farley and Scott Hoenig, “Determinants of Financial Performance: A MetaAnalysis,” Management Science, 3 6(10): 1143-1159, 1990. Carlson, John A. and William C. Dunkelberg, “Market Perceptions and Inventory-Price-Employment Plans,” Review of Economics and Statistics, 7 1(2): 318-24, 1989. Christensen, Clayton M., “The Past and Future of Competitive Advantage,” MIT Sloan Management Review, 4 2(2): 105-109, 2001. Collis, David J., “A Resource-Based Analysis of Global Competition: The Case of the Bearings Industry,” Strategic Management Journal, 12: 49-68, 1991. Collis, David J., “Corporate Strategy in Multibusiness Firms,” L ong Range Planning, 29(3): 416-9, 1996. Cool, Karen and James Henderson, “Power and Firm Profitability in Supply Chains: French Manufacturing Industry in 1993,” Strategic Management Journal, 1 9(10): 909-26, 1998. Cubbin John S., Market Structure and Performance-The Empirical Evidence, London: Harwood Academic Publishers, 1988. Da Silveira, Giovani, Denis Borenstein and Flavio Fogliatto, “Mass Customization: Literature Review and Research Directions,” International Journal of Production Economics, 71(1): 1-13, 2001. Daems, Herman and Howard Thomas (eds.), Strategic Groups, Strategic Moves and Performance, New York: Pergamon, 1994. Duncan, W. Jack, Peter M. Ginter and Linda E. Swayne, “Competitive Advantage and Internal Organizational Assessment,” Academy of Management Executive, 12(3): 6-16, 1998. Manufacturing Industries,” Rand Journal of Economics, 1 9(4): 495-515, 1988. Easton, Allan, Complex Managerial Decisions Involving Multiple Objectives, New York: John Wiley & Sons, 1973. Virginia, Working Paper 01-07, 2001; available electronically from SSRNEPC, http://papers.ssrn.com/abstract=263526. Fahey, Liam, “Competitor Scenarios: Projecting a Rival’s Marketplace Strategy,” Competitive Intelligence Review, 1 0(2): 65-85, 1999. Fahey, Liam and V. K. Narayanan, Macroenvironmental Analysis for Strategic Planning, St Paul, Minn: West Publishing, 1986. Fahey, Liam and Robert M. Randall (eds.), Learning from the Future: Competitive Foresight Scenarios, New York: John Wiley and Sons, 1998. Fridson, Martin S. and Fernando Alverez, Financial Statement Analysis: A Practitioner’s Guide, New York: Wiley, 2002. Dynamics,” European Management Journal, 1 8(6): 619-637, 2000. Geroski, Paul A., “Early Warning of New Rivals,” Sloan Management Review, 4 0(3): 107-17, 1999. Goold, Michael and Kathleen Luchs, “Why Diversify? Four Decades of Management Thinking,” Academy of Management Executive, 7(3): 7-25, 1993. Gordon, Mary E. and George R. Milne, “Selecting the Dimensions that Define Strategic Groups: A Novel Market-Driven Approach,” Journal of Managerial Issues, 1 1(2): 213-233, 1999. Graham, John R., Michael L. Lemmon and Jack G. Wolf, “Does Corporate Diversification Destroy Value?” Journal of Finance, 5 7(2): 695-720, 2002. Grant, Robert, M., Contemporary Strategy Analysis, ( 4 th . Ed.), Malden, MA: Blackwell Publishers, 2002. Hammond, John. Ralph Keeney and Howard Raiffa, Smart Choices: A Practical Guide to Making Better Decisions, Boston, MA: Harvard Business School Press, 1999, Hansmann, Henry, The Ownership Of Enterprise, Cambridge, MA: The Belknap Press of Harvard University Press, 1996. Hardin, Steve, “Hal Varian: Six Forces Shaping the Network Economy,” Bulletin of the American Society for Information Science, 25(2), 1999, 16-19. Hax, Arnoldo C. and Nicolas S. Majluf, Strategic Management: An Integrative Perspective, Englewood Cliffs, N.J: Prentice-Hall, 1984. Hennart, Jean-Francois, “A Transaction Cost Theory of Equity Joint Ventures,” Strategic Management Journal, 9 (4): 361-74, 1988. Hyland David C. and J. David Diltz, “Why Firms Diversify: An Empirical Examination,” Financial Management, 3 1(1): 51-81, 2002.