Overview Of The Strategic Audit You Will Be Analyzing A Comp

Overviewforthestrategicaudityouwillbeanalyzingacompanyofy

Overview for the Strategic Audit you will be analyzing a company of your choosing and using what you learn to make strategic recommendations going forward. The link between the past (performance over time), the present (current strategy and trajectory), and the future (strategies to achieve or maintain competitive advantage) is key. Your analysis should tie back to the company's strategy in each section.

Choose any company (excluding Target, Walmart, Amazon, Apple, Samsung, Microsoft, Tesla, Ford, Red Bull). Part of the audit involves performance analysis, but keep in mind that finding data for private companies may be challenging. The report should include five sections: Strategy Analysis, Performance Analysis, External Analysis, Internal Analysis, and Conclusion & Recommendations. Each section should be about half a page, follow the specified questions, and relate analysis to the company’s strategy.

Paper For Above instruction

The strategic audit of a chosen company involves comprehensive analysis of its current strategy, performance metrics, external environment, internal resources, and strategic options for future growth. An effective audit helps clarify how well the company is positioned within its industry, what strategic advantages it holds, and what avenues exist for sustainable competitive advantage. This paper applies theoretical concepts from strategic management to assess a company's strategic posture, supported by relevant data and benchmarks.

Strategy Analysis

The cornerstone of understanding a company's competitive position lies in dissecting its current strategies at both business and corporate levels. At the business level, the focus is on determining the degree to which the company employs cost leadership or differentiation strategies. For instance, a technology giant like Apple predominantly pursues differentiation via innovative products, branding, and customer experience, allowing it to command premium pricing (Porter, 1985). Conversely, a retailer such as Walmart emphasizes cost leadership through economies of scale, supply chain efficiencies, and low-cost sourcing (Hill & Jones, 2012). Evaluating the extent of these strategies involves analyzing sources of competitive advantage—cost advantages through operational efficiencies or differentiation through product uniqueness or brand strength.

At the corporate level, the company's diversification scope is crucial—whether it operates within a focused niche or a broad array of markets. For example, diversified conglomerates like General Electric operate across multiple industries, whereas a startup might focus solely on a narrow niche. The firm's geographic footprint—whether domestic, regional, or global—also influences strategic posture. Recent acquisitions or strategic alliances expand market access or technological capabilities, directly impacting strategic positioning and resource complementarity (Ansoff, 1957).

Performance Analysis

Performance metrics are vital indicators of strategic success. Financial metrics such as Return on Assets (ROA), gross profit margin, and EBITDA provide quantitative measures of profitability and operational efficiency. For example, a rising ROA indicates effective asset utilization, while gross margin trends reveal pricing power and cost controls. Additionally, industry-specific metrics offer granular insights. For hospitality chains, occupancy rates or same-store sales growth reflect operational effectiveness. Comparing these metrics against competitors and industry averages allows assessment of the firm's competitive advantage and strategic efficacy (Barney, 1991).

Analyzing historical performance reveals whether strategic shifts have yielded desired results. A firm that sustained high growth rates or improved margins over time exemplifies positive strategic implementation. Conversely, stagnation or decline signals misaligned strategies or external challenges. Long-term strategies that entail initial sacrifices—such as heavy R&D investment for innovation—may suppress short-term metrics but position the company advantageously over the long run.

External Analysis

The external environment shapes strategic opportunities and threats. Industry structure, assessed via Porter’s Five Forces, highlights the intensity of rivalry, threat of new entrants, bargaining power of suppliers and buyers, and the threat of substitutes (Porter, 1980). For example, in the tech industry, rapid innovation and high competitive rivalry challenge firms to maintain differentiation benefits. The industry life cycle—whether emerging, mature, or declining—affects potential strategic actions. A mature industry may favor cost leadership or differentiation based on market saturation, while emerging industries might prioritize innovation and market capture.

Environmental scanning reveals opportunities, such as emerging markets or technological trends, and threats like regulatory changes or disruptive competitors. External factors, including economic cycles, political stability, and technological advancements, influence strategic choices, requiring agility and foresight. For instance, increasing e-commerce adoption might prompt a retailer to develop a stronger online presence or supply chain resilience.

Internal Analysis

Internal resources and capabilities form the backbone of strategic advantage. Identifying three key resources—for example, a proprietary technology, brand reputation, and supply chain network—allows understanding of how these contribute to competitive positioning (Barney, 1991). Deploying these resources within the supply chain, whether inbound, operations, or marketing channels, determines their effectiveness. Using the VRIO framework, resources that are Valuable, Rare, Costly to Imitate, and Organized to capture value offer sustained competitive advantage (Barney, 1991).

Assessing whether additional resources or capabilities need development guides strategic investment. Internal strengths could include innovation capacity, customer loyalty, or operational efficiency, while weaknesses may involve resource gaps or organizational bottlenecks. Internal analysis thus informs strategic options, emphasizing whether to exploit existing strengths or address weaknesses through acquisitions, partnerships, or internal R&D.

Conclusion & Recommendations

Strategic options must be evaluated based on their alignment with performance data, external opportunities, internal capabilities, and long-term objectives. The current strategy's impact on performance—whether it yields growth, profitability, or market share—must be critically appraised. If certain strategies lead to short-term sacrifices but promise long-term payoff—such as investment in innovation or market expansion—these should be considered viable paths.

Multiple strategic pathways are available, from reinforcing core competencies to diversification or technological innovation. Evaluating decisions involves considering advantages, disadvantages, risks, and potential synergies or conflicts. For example, pursuing a diversification strategy may open new revenue streams but dilute focus or strain resources. Path dependency suggests early strategic decisions can lock the firm into specific trajectories.

Going forward, the firm should prioritize strategic flexibility, invest in core capabilities, and continuously scan the external environment to adapt swiftly. Emphasizing innovation, customer-centric differentiation, and operational excellence positions the company to sustain competitive advantage amid industry evolution.

References

  • Ansoff, H. I. (1957). Strategies for diversification. Harvard Business Review, 35(5), 113-124.
  • Barney, J. B. (1991). Firm resources and sustainable competitive advantage. Journal of Management, 17(1), 99-120.
  • Hill, C. W. L., & Jones, G. R. (2012). Strategic Management: An Integrated Approach (10th ed.). Houghton Mifflin.
  • Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.
  • Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.
  • Grant, R. M. (2019). Contemporary Strategy Analysis (10th ed.). Wiley.
  • Barney, J. B., & Hesterly, W. S. (2019). Strategic Management and Competitive Advantage: Concepts and Cases (6th ed.). Pearson.
  • Hill, C., & Westbrook, R. (1997). SWOT analysis: It's time for a product recall. Long Range Planning, 30(1), 46-52.
  • Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79-91.
  • Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2017). Strategic Management: Competitiveness and Globalization. Cengage Learning.

Related Assignments