Q.3. What is strategic analysis?
Ans. Strategic Analysis: There are variety of perspectives, models and approaches used to analyse and to develop the strategies. The implementation of these different models depends on a large number of factors, such as size of the organisation, nature and complexity of the organisation’s environment and the organisation’s leadership and culture. One of the most widely used strategic planning models is a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis or TOWS (Threats, Opportunities, Weaknesses, Strengths). Most companies use, in one form or another, SWOT analysis as a basic guide for strategic planning. The worth of a SWOT analysis is often dependent on the objective insight of those management individuals who conduct the SWOT analysis. If management (or consultant management) is able to provide objective relevant information for the analysis, the results are extremely useful for the company. Typically, there are six most effective strategic planning models:
1. Boston Consulting Group Matrix (BCG).
2. General Electric Matrix (GE 9 Cell).
3. SWOT Analysis Matrix. .
4. Porter’s Generic Competitive Model.
5. Porter’s Five-force Model.
6. Porter’s Diamond Model.
Q.4. Discuss the life cycle of corporate development.
Ans. Corporate Development Life Cycle: Corporate development life cycle consists of the following stages:
Stage 1: At the beginning stage, the company founders concentrate on ideas and future potential. They focus on making motivated plans. After this the stage ends and another stage begins when the founders assume risk.
Stage 2: This stage moves founder’s interest from ideas to outputs. This is basically an actionoriented and opportunity-driven stage. No one at this stage gives attention to documentation, controls, systems, or procedures. Founders work hard to improve sales and try to execute activities by themselves.
Stage 3: This is the stage where firm gets a new shape. This is the time to hire experts or consultants to improve the productivity and efficiency of operations. This stage also involves conflicts between internal employees. A firm may face a temporary loss or may turn away from its vision.
Stage 4: At this stage management works on the transparency of vision. Here firms establish a balance and a discipline between controls and activities, companies do innovation to meet their customers needs.
Stage 5: Being strong and efficient firms still welcome new ideas, but with less excitement than they did at early stages. At this stage the finance department of company begins to impose controls on short-term outcomes that restrict long-term innovation. Companies rather focus on research and development at this stage.
Stage 6: In this stage companies conduct a review and analysis to find what went wrong and how to fix it. Efforts are analysed and increased according to the requirement. Cost reductions may also take place to increase revenues. There is a possibility that company may die and will never stand up, in the market, if couldn’t fix the issues in time.
Stage 7: If company does not die in the previous stage it means they are in a regulated environment and can say more in market. Now, at this stage firm has to determine the critical factors to stay successful, firms has to analyse their performance. If a company fails to create its value in customer’s view, it is possible that owners have to close down the company,
Stage 8: This is the final stage of the corporate development life cycle. The stage may crawl up over several years struggle, or it may come suddenly, with one massive blow. Company may collapse or break down if it is not able to generate the cash required for running business operations producing goods and services.