Strategic analysis is the use of various tools to prepare business strategies by evaluating the opportunities and challenges faced by the company as it moves forward. Typically, strategic analysis involves a review of internal strengths and weaknesses as well as factors in the external environmental that could affect business.
Industry analysis is one major element of a strategic analysis process. Industry includes an overall assessment of the sector in which the business operates. A movie rental store would evaluate the size of the movie rental market, current competitors, target markets and market trends. Understanding the current industry structure allows a business to decide how it best fits in with regard to positioning.
A tool often used as part of strategic planning and analysis is SWOT. SWOT is an acronym for strengths, weaknesses, opportunities and threats. This tool allows company leaders to assess internal and external factors that could help or hinder the company. A review of current company strengths and weaknesses allows leaders to plan how to leverage strengths, and overcome weaknesses. The opportunities and threats evaluation allows for assessment of the external environment. The goal is to seize opportunities for new markets or products to create revenue. The business must also navigate around threats by planning ahead and making adjustments as needed.