Corporate Strategic Analysis

'Success without planning is luck'  

All business leaders know they have to plan forward.  For without a stated destination, the firm could find itself practically anywhere.  But planning is more than just stating goals or suggesting a firm's future destiny.  It requires a guide map showing how the firm will reach its goals, navigating the tricky waters of competition, change, and innovation.

Business theoreticians have classified the strategies available for firms into several broad categories.  Under this classification scheme, there are only a basic set of generic business strategies to be pursued:

• Differentiation strategies: Cost leadership, Quality leadership, Technical and innovation leadership

• Focus strategies and Business portfolio analysis: Hold, Invest, Harvest, or Divest

• Growth strategies: Penetration, Product/market development, Vertical integration, Acquisition

• Strategic partnering and joint venture opportunities

It is interesting to note why diversification is out of favor as a strategy.  Diversification's goal of reducing risk is not efficient.   Diversification does not shelter the shareholder from systematic risk.  And the shareholder can better and more easily protect against specific risk by diversifying his portfolio than by investing in a conglomerate.

The Strategic Analysis Process

Strategic analysis uses a series of analytical tools to develop a set of strategic alternatives for a firm, and the process provides some means of evaluating the scenarios amongst each other.  First, Chesapeake consultants, in conjunction with the client's management, perform an information gathering stage, where the essence of the firm's business, its strengths and weaknesses are understood.  The company is rigorously scrutinized with financial statements analysis - horizontal, vertical, and ratio analysis.   Simultaneously the firm's business and market environments, its value chain, and the market's competitive and demand dynamics are characterized.  This information is then used for internal and external factor evaluations and in the common tools of strategic analysis.  The strategic alternatives are evaluated and analyzed -- the goal of the strategic analysis is to facilitate a decision upon a course of action.  An implementation plan then follows the selected strategic direction.