Strategic Tools for Business Research and Analysis

Strategic Tools for Business Research and Analysis

Copyright: © 2022 |Pages: 33
DOI: 10.4018/978-1-7998-8073-8.ch001
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There are many tools and techniques available for business analysis, but the question is whether there is one tool or a set of tools that are most commonly used. What tools or techniques are taught to business managers or business development officers? The literature is reviewed for tools that are most widely taught and in use. The chapter examines the reasons they have been chosen and the comments on how effective they were found to be. The use of tools generally and the need to use more than one tool are discussed. Several authors suggest that the central role of a business analysis tool appears to be to provoke discussion amongst the business development officers. The discussion seems to be more important than the tool in preparation for developing strategic options. The theory of resource-based analysis is discussed with its role in analysing the company and its competition.
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An important responsibility of senior management is to assess the risks that the business may encounter, perhaps by weaknesses in some functional areas, perhaps by intense competition by others in the market. Management must, of course, determine the choices available to develop the organisation to create a competitive advantage. The structure of the business must be thoroughly understood in order to do the above risk assessments effectively and to do this requires a critical analysis and management needs the appropriate tool to do this. Not just one or two aspects of the business like marketing or product development but the whole of the company. Not in detail, but the critical elements across the business, and thoroughly understand how the different aspects of the organisation interact and the degree of interdependencies.

SWOT analysis is one of the tools most often used, and there is a detailed review of the criticisms that it is too naïve unless matched with another tool to give more focus. The Balanced Scorecard is reviewed through its evolution from performance management to strategy management, but can it be used as an analysis tool? Benchmarking is popular in some geographical areas, but it is a more focused tool designed to monitor and manage performance. However, a company must find a matching partner for the analysis to be possible.

Many organisations will have a variety of reports on the various business activities to enable day to day, and month to month management, such as weekly costings, production figures, marketing figures, supply chain activity and customer and product evaluations and many others. A business will produce a variety of reports in the course of doing business; there are the mandatory financial reports and the management reports needed to provide insights into the company's performance. The difference between the two sets of reports is that the following financial statements are all necessary for statutory compliance:

  • Profit and Loss Statement

  • Balance Sheet

  • Accounts Payable

  • Accounts Receivable

  • Statement of Cash Flows

The statutory finance reports are limited as they only indicate the company's financial standing at a specific point in time. They show the overall financial picture of how the company is performing on that date but don’t give the specifics of the operations. They look backwards and don’t provide any information on how the business might perform next month or next quarter.

A different set of reports are the management reports which are often focused on particular aspects of the business and look into the details of an element of the company and analyse the business drivers. Reporting is done through the process of compiling and reviewing the information within a specific functional area such as finance, sales, operations, inventory control or any area of the business where performance is monitored and measured. They provide valuable insights for management, such as information on spending, profits and growth. Reports will provide important information to help develop future forecasts, marketing plans, guide budget planning and improve decision-making.

However, none of these reports will tell the whole story of the state of the business, its potential for development and its risk exposure; they only look at specific parts of the operation and often examine different functions at different times. Paul, Yeates and Cadle (2010) list 72 various analysis tools or techniques for use within a business; most are very narrow in function and not designed to look at the whole company. To develop strategic choices for the company's future direction, it is worth looking more specifically at the availability of strategic management tools and what they offer in the way of strategic analysis. This chapter explores the literature on strategic tools and techniques for the availability of a tool or set of tools designed to perform a comprehensive analysis of the business and its competitive situation.

Key Terms in this Chapter

SWOT: An analysis of the business to determine the strengths, weaknesses, opportunities, and threats.

VRIO Framework: Analyses the resources and capabilities, using four indicators of valuability, rarity, imitability, and organization.

Benchmarking: Is an integral part of the continuous improvement cycle and comprises five integrated steps: define, measure, analyze, improve, and control. Measuring and comparing to competition, and identifying opportunities for improvements.

Business Development: An approach that uses continuous improvement as the strategic development approach advocated by Sorensen (2004) AU115: The in-text citation "Sorensen (2004)" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. .

Resource-Based View (RBV): This approach analyzes and interprets resources of the organization to understand how organizations achieve sustainable competitive advantage.

Balanced Scorecard: A performance management tool with four quadrants of evaluation, adding internal business processes, customers, and learning and growth to the financial dimension.

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