A New Strategic Analysis Framework

Strategists prepare detailed Strategic Analysis reports consisting of many pages and figures. But it is really hard to obtain a benefit from a mass like this, which supports the strategic decision-making process.

In this article, a holistic framework is suggested for a big picture understanding of external environment.

SYSTEMIC POINT OF VIEW

The external environment outside organization consists of several sub-systems which interact with each others.

This mapping technique presents a visual articulation of the external environment in one page to consider all the interactions between subsystems via factors.

The framework is based on two analysis dimensions: Time and geography.

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We, strategists try to:

• understand the current state caused by actors geographically and

• predict the future state expected to be caused by actors geographically on the basis of time.

Predicting the future states requires Strategic Scenario Analysis skills.

​​Click to learn how to use Strategic Senario Analysis technique

STRUCTURE OF THE FRAMEWORK

The framework consists of 11 domains:

PESTEL Domain

The domain PESTEL, which stands for Political, Economical, Social, Technological, Environmental and Legal, contents macro environmental factors. Factors in the sub-domains of PESTEL are related to the macro system levels such as countries, nations, governments, societies, international community, ecosystem. These factors have indirect effects on the organization.

​Click to learn how to conduct a PESTEL Analysis

Market Domain

The Market domain consists of two sub-domains: Customers and Competition.

The Customers sub-domain contents the factors related to:

• potential customer segments or personas for several market segments

• their jobs-to-be-done (JTBD)

• their economic viabilities (such as population size, disposable income, wallet share, purchase frequency, price elasticity)

• their usage and attitudes (U&A)

• lifestyles adopted by them

• global and local consumer trends

• ...

The Competition sub-domain explores:

• what extent the competitors satisfy customers' JTBD and trend expectations

• competitors' ...

  • business strategies

  • capabilities and competencies

  • strategic alliances

  • assumptions about their markets and theirselves

  • ...

The findings included in these two sub-domains will guide the top management to define target markets (Where-to-Play).

Channels Domain

Channels are platforms where company's value propositions are delivered to customers and experience takes place through a customer journey. In this domain, topics as the following are analyzed:

• Global and local channel trends (such as ecommerce, omnichannel, marketplace, wholesale, malls, department stores, pop-up stores, digital stores, new customer journey practices in the industry)

• Channel penetration (by customer segments)

• Attitudes towards channels (by customer segments)

• Internet and social media penetrations (by customer segments)

• Development in logistics and cargo transportation (service costs of 3PLs, freight, investments by region/country, digitalization, robotics, new business models and more)

• ...

Supply System Domain

• Evolution of global sourcing hubs and emergence of new sourcing markets

• Material innovations and new trends

• Development of the commodities market (cotton, oil, etc.): Commodity prices, yields and production, supply level etc.

• Changes in supply capacity and prices of raw materials, semifinished products and services

• Changes in supplier performance (capacity, quality, price, lead time, minimum order quantity, innovation-R&D capability etc.)

• Bargaining power of suppliers

• Local production obligations in various countries

• ...

Resources Market Domain

Resource markets are where resources required for the organization to operate are provided: Labor, capital, land, service etc. Different types of markets should be analyzed in within the discipline of market analysis:

• Labor markets (in terms of availability/shortage of candidates for critical and strategic roles, qualifications, levels of wages and benefits for the industry and competitors, employee value propositions/EVPs offered by competitors, employee brand scores and employee retention levels of competitors, industry perception, effects of automation on the job market, emerging professions, education system by countries, participation of generations in the workforce, expectations of new generations, entrepreneurship and more)

• Financial markets (stock prices, in terms of availability of credit solutions, lending appetite of banks, interest rates and more)

• Services markets (in terms of availability/shortage of services, number of vendors and service providers, quality, capacity, service costs and more)

• ...

For example "qualified labor shortage in Eastern European markets", "lack of 3PL providers in Sub-Saharan Africa because of low logistics investments", "low lending appetite of the private banks in Turkey".

The domains in the framework should be redesigned for support and operational units although the logic of it is the same.

​Click to see Strategic Analysis Framework in action

My past experience shows that all executives obtain a very crystal clear point of view about "the big picture" and interaction and impacts and they do not miss anything.