Why is strategic business analysis important? Omer Riaz July 4, 2022

Why is strategic business analysis important?

business analysis tools

Strategic business analysis can be an unclear term for a few businesses. It’s a vital part of long-term organizational planning and the initial phase in the planning process. 

In the modern era of globalization, the strategy to run different online and offline businesses continuously evolves. A company can’t work well in the competitive marketplace unless you are working with a constructive and influential strategy.

In this article, you will get information about strategic business analysis, methods of conducting it, and the major components of strategic analysis. 

strategic business analysis


Overview of Strategic Analysis 

Business strategic analysis refers to collecting data that assists organizational leaders in formulating the goals and objectives and constructing long-term strategies for the business. A business can understand its environment through strategic analysis and design the action plan accordingly. 

Strategic business analysis is the pillar to dominate within a specific marketplace. Do you think it’s enough to have quantitative data analysis to make a business plan for the future? No, it’s not enough at all. The organization needs information both in the form of qualitative and quantitative data. It means that the business’s internal and external environment should be investigated. 

You are performing strategic analysis if you are: 

  • Focusing on high-level strategy: As a business owner highly focusing on business operations, marketing, sales, or any other aspect, strong strategic analysis won’t be happening. Your main focus should be the points directly impacting your long-term growth. 
  • Looking into the past and future: For competent strategic analysis, you should dive into the past data analysis for performance analysis and predict what can happen in the future. Effective reporting of past data enables the organization to make smart and informed future decisions. 
  • Leadership role: Employees can collect data and gather useful information, but the leadership has to make potential decisions based on the available information. 

Remember, strategic analysis isn’t a one-time process. To remain competitive and up to date, you must conduct a regular strategic analysis of your company. Especially in those organizations where technology changes fast, routine strategic analysis is crucial. Performing this exercise will keep your organization on the right track and ensure long-term success. 

Types of Strategic Business Analysis 

There is no standard format for the development of strategic analysis. Different methodologies guide you through the way of collecting and analyzing business performance. Two of the most crucial types of strategic analysis are: 

  • SWOT analysis

SWOT analysis focuses on strengths, weaknesses, opportunities, and threats that a particular organization encompasses within its targeted industry. You will be enabled to know about what are the things that are going well for your company and where you need to progress. 

It helps an organization to improve its internal and external business environment. The internal business environment includes strengths and weaknesses, and the external business environment includes threats and opportunities. 

  • PESTEL analysis

PESTEL analysis concentrates on the external factors (political, economic, social, technological, environmental, and legal) that are not under the control of your organization, but you should be prepared for that.

This analysis can inform your organizational decisions and switch your attention towards changing tax regulations, implanting new laws, changing technology, and many others.

Any possible change that can occur and impacts your business should be part of your strategic plan to eradicate any uncertain situation.

Most companies perform swot and strategic analyses of their organization to get a complete picture of their surrounding business environment.

The entire leadership team of your company should be part of this process to develop useful decisions regarding executed strategies. The team members can cumulatively provide their viewpoints on different data sets and the company’s current position. A well-informed team can produce the most effective strategic analysis for the company. 

Crucial Components of Strategic Analysis 

Before knowing about the steps involved in the strategic analysis, it’s important to know that strategic analysis is a fundamental part of the organization’s decision-making process. 

Five steps that are included in strategic business analysis are: 

  • Level of strategic analysis: Determine what type of strategic analysis you want to perform. Whether the strategy is based on corporate, departmental, or functional levels? It’s vital to understand the strengths and weaknesses of your organization so the strategy you formulate can prove to be the best. 
  • Gathering Team: All the managers from different departments and leadership teams should sit together to provide their perspectives on business. Together they can make effective decisions for business development. 
  • Using SWOT or PESTEL analysis: Ask the team members to collect qualitative and quantitative information and group together to develop feedback and comments on the performed analysis. A healthy discussion on the results can lead to informed strategy and effective planning. 
  • Summarize findings: The proposed analysis will be the foundation of your strategy. Prepare a summary or report of the results and present them to your team members to capture thoughts and reviews about the future action plan. Ensure to present the findings and analysis understandably so the team members can easily capture useful ideas of your discoveries. 
  • Develop a strategy based on analysis: After capturing and analyzing the potential information effectively, use them to create your future goals and priorities. How can you use your current strengths to take advantage of the opportunities? How can you manage upcoming threats and work on your weaknesses to ensure efficiency? Develop a strategic map and link your objectives to one another. 

The strategic analysis should be done effectively, and it can lead organizations towards innovation and scale within their business environment. 

In the End 

Currently, you are living in an environment where technology is continuously evolving. You can find a number of competitors belonging to your niche, and they might surpass you in revenue. The secret recipe for their fast growth is their unique strategy

Strategic analysis of the business should be done at a broader level to get the complete picture of your current business environment. We hope this article will help you formulate the strategic analysis of your business and lead your business towards higher revenues in the long term.  


How do you conduct a strategic business analysis?

  • Know your desired goals. 
  • Collecting data and analyzing information. 
  • Constructing a strategy. 
  • Implementation of strategy. 
  • Evaluation and control. 

What are the four types of strategies under strategic analysis?

  • Corporate level strategy
  • Business level strategy 
  • Operational level strategy 
  • Functional level strategy