Strategy Formulation Begins With An Analysis Of The Forces: Strategic Management Case Study, UCD, Ireland

External Analysis and Strategy

Strategy formulation begins with an analysis of the forces that shape competition within the industry in which a company is based. The goal is to understand the opportunities and threats confronting the firm and to use this understanding to identify strategies that will enable the company to outperform its rivals.

Thus, to succeed, the strategy must either fit the industry environment in which it operates, or the company must be able to reshape the industry environment in which it operates to its advantage through its choice of strategy.

Opportunities arise when a company can take advantage of conditions in its environment to formulate and implement strategies that enable it to become more profitable.

Threats arise when conditions in the external environment endanger the integrity and profitability of the company’s business.

Internal Analysis And Strategy

Internal analysis gives managers the information they need to choose the business model and strategies that will enable their company to attain a sustained competitive advantage.

Thus, the goal of this class is to explore the basis of competitive advantage at the level of the individual company through internal analysis.

Internal analysis is concerned with identifying the strengths and weaknesses of a company. Thus, managers must be able to identify how the strengths of an enterprise boost its profitability and how its weaknesses result in lower profitability.

Internal analysis, coupled with an analysis of the company’s external environment, gives managers the information they need to choose the strategies that will enable their company to attain a sustained competitive advantage.