Glossary of techniques for strategic analysis. This article provides a glossary of analytical techniques, страница 14

van der Heijden (1996) Senarios; the art of strategic conversation. Wiley, Chichester.

Segmentation: strategic

See business de®nition.

Sensitivity analysis

This is a method for testing a plan for vulnerabilities. It may be applied to a strategic plan as a whole, or to an evaluation of capital expenditure. Essentially, it is an assessment of ®nancial results to a series of `what if . . .' questions, and may lead to different strategic decisions if the risks look too high.

Typically, it deals with questions such as what if sales were to fall by 10%. Some care is necessary in de®nition, because sales value may fall because of a volume or a price drop, and the impact on pro®t and cash ¯ow will not be the same in both situations. Sloppy descriptions of sensitivities can lead to misunderstandings.

Sloppy descriptions of sensitivities can lead to

misunderstandings

Sensitivity analysis can be made more useful if it is accompanied by an analysis of the causal factors that contribute to success or failure (for example, what happens if the competitors react with a price cut, or where we would be if the government changed). A table of impacts should be prepared, such as costs, capital costs, prices, sales volumes, tax and the like, and the effectthatthese changeswouldhave onresults. In the end several factors may have identical end results, so the mathematical calculations may be fewer than the events examined. This approach may help the development of strategies that avoid risk, whereas the more common, more passive style of sensitivity analysis, ends at understanding where the project or plan is most sensitive.

Hussey, D. E. (1991). Introducing Corporate Planning: Guide to Strategic Management, 4th edition, chapter 14, Pergamon Press, Oxford.

Mantell, L. H. and Sing, F. P. (1972). Economics for Business Decisions, pp. 434±438, McGraw-Hill Kogakusha, Tokyo.

See also: decision trees, discounted cash ¯ow and risk analysis.

SOFT

See SWOT.

Strategic group mapping

A method of matrix display which groups competitors in an industry by their strategic dimensions, such as price policy, cost position and specialization. Some 13 variables have been identi®ed. For the matrix the analyst has to identify a few particularly important dimensions on which to construct the map. An example might be to use specialization (high to low) as one axis, and vertical integration (high to low) as the other. This concept, and there is no reason why two or three matrices using different axes should not be used, enables competitors to be grouped and positioned on the matrix by the common components of their strategy. This may be useful in any industry, but is particularly valuable in an industry with numerous competitors where little insight would be gained by studying each individually.

McGee, J. and Thomas, H. (1992). Strategic groups and intra-industry competition. In: D. E. Hussey (ed.), International Review of Strategic Management, 3, Wiley, Chichester.

Porter, M. E. (1980). Competitive Strategy, chapter 7, Free Press, New York.

See also: group competitive intensity map and industry mapping.

Strategy cube

This approach to analysis has some similarities with the business de®nition concept. It argues that strategy can be looked at on three dimensions, technology, business and logistics. These are the three axes of the strategy cube. The position on each axis follows the subheadings familiar, partly familiar and unfamiliar.

Nakamura, G-I. (1990). New dimensions of strategic management in the global context of the 1990s. In: D. E. Hussey (ed.), International Review of Strategic Management, 1, Wiley,

Chichester.

SWOT

Strengths, weaknesses, opportunities and threats; a simple approach which appears under several names. `WOTSUP', the common initials have the same meaning: UP stands for underlying planning, SOFT here fault is used instead of weakness, and TOWS same words, different order. If we wanted to be original I suppose we could call it TWOS analysis, which both stands for the same words, and indicates that they cover the two dimensions of internal and external issues!