10 essential tools for strategy analysis [Updated 2023]

Strategic Analysis is a core step in the Strategic Learning Cycle. Every strategist should have a toolbox of analytical models at his or her disposal.

Having the right tools won't necessarily make you a good mechanic. Nor will having the right strategy analysis tools make you a good strategist. But they will help a good strategist get the job done more effectively.

Here is my list of 10 essential tools for  strategy analysis:

1. SWOT

The SWOT is the most basic form of strategic analysis. Simply list the organisation's Strengths, Weaknesses, Opportunities and Threats. (learn more)

2. Porter's Value Chain

The value chain is a simple (graphical) method for identifying and describing a firm's main functions and understanding how they contribute to value creation. (learn more)

3. The Strategy Canvas

The Strategy Canvas was popularised in the book "Blue Ocean Strategy" by W. Chan Kim and Renee Mauborgne. You can use it to understand how a firm differentiates itself from its competitors and other alternatives. (learn more)

4. The Business Model Canvas

Alexander Osterwalder and Yves Pigneur introduced The Business Model Canvas in the book "Business Model Generation". It is a very effective way of describing the key components of a business model. You can use it as the starting point for strategic analysis as well as for exploring alternative business models. (learn more)

5. PESTEL

The PESTEL is a macro-scanning framework which is useful for ensuring that you consider a broad range of possible sources of opportunities and threats. The letters represent the Political, Economic, Social (or Socio-economic), Technological, Environmental and Legal opportunities and threats in the firm's environment. (learn more)

6. McKinsey 7S

The McKinsey 7S is useful for ensuring that you consider all aspects of the organisation when identifying its strengths and weaknesses. The 7 Ses stand for: Structure, Systems, Style, Staff, Skills, Strategy and Shared Values. (learn more)

7. Porter's 5 Forces

Porter's 5 Forces model is another framework for identifying threats and opportunities within the firm's environment. It considers the bargaining position of suppliers and customers (including distributors), the threat of new entrants and substitutes, as well as competitive factors within the industry itself. (learn more)

8. Pareto Analysis

A Pareto Analysis is based on the maxim that 20% of the products, services, customers or distribution deliver 80% of the profits. A Pareto chart is a useful visualisation for showing this. However, its accuracy depends on the reliability of your cost allocation system. (learn more)

9. BCG Matrix

You can apply the BCG Matrix to any business with more than one product or service line, or more than one customer segment. Plot the market share against the market growth rate for each product, service or customer segment. Then consider strategic options based on their relative position on the chart. (learn more)

10. Scenario Analysis

The future is inherently uncertain. Fortunately, good business strategy only requires you to be able to anticipate the future. You don't need to be able to predict it. Scenario Analysis is a tool to help you to anticipate multiple different futures. This allows you to construct your strategy around the premise that you can't be sure which, if indeed any, of them will come to pass. (learn more)

You can work with all of these tools online in the StratNavApp.com online application. It's free. And if you are working in a team, you can collaborate with your team members in building your strategic models. Click here to get started.

See also:

• 7 Top Tips for Strategy Analysis
• The devil is in the detail
• Essential Strategy Models (Slideshare)
• Are your strategic insights insightful?
• Doing strategy analysis with StratNavApp.com

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