The Best Strategy Tools to Analyze Your Market & Business
Clarke Ricks
School of Business, Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 6, 2021
The Best Strategy Tools to Analyze Your Market & Business
When developing, refining or reviewing a business strategy there are a huge range of
tools, models and frameworks that can help you organize your thinking and give you a
process by which to conduct analysis and get the necessary insight to make the right
strategic decisions for your business.
Knowing what to do to grow your business and drive your success is difficult and you’re
unlikely to simply be struck with a brainwave and suddenly have all the answers. But don’t
panic, hundreds of academics and business theorists, as well as leading practitioners and
business thinkers have devised numerous frameworks to help leaders ask the right
questions, to get the right insight and uncover the best course of action for their business.
So, it’s just a case of working through all these strategy tools and coming out with a
plan. Right?
Well…the trouble is, there are quite literally loads of possible tools to choose from. You
can’t use them all or you would be analysing and strategizing for all of time, rather than
getting on with the execution and achieving your goals.
So, which tools should you pick? And in what order should you work through them?
With so many strategy tools and frameworks in existence it’s hard to know what tool does
what or when you should use them. That’s why we’ve pulled together this initial list of our
favourite tools to get you started.
All of these tools will help you with the first three stages of your strategic analysis –
namely, understanding your market, external environment, competitors and your own
business.
The stages of strategic analysis
If you use the right strategy tools, then devising a strategic plan can be a process. We
certainly believe that here at Lucidity, after all, that’s what our strategy software does! We
guide our customers through the process of conducting analysis and making strategic
decisions to build a solid plan to drive their growth. It can be a simple, step-by-step process
if you have the right tools.
Here are the stages of analyse you need to do in order to build an informed and
effective strategy.
1. Understand your market and the external environment you are operating in
2. Understand your competitors
3. Analyse your own business
4. Understand the different strategic options you have
5. Evaluate the different strategic options and make the right decisions to set your
strategy
6. Structure your strategy plan so it’s easy to understand
7. Test that strategy and refine accordingly
Today we're going to focus on the first three stages and take you through our favourite
strategy tools to get the job done, with links to find out exactly how to use each tool once
you’re ready to get started.
How to use these tools
We would always recommend you use these strategy tools as the basis for workshops
with a diverse range of people from across the business. Although you can work through
these tools on your own, working and collaborating with your teams will nearly always
produce a better result. Different people will have different perspectives and that will lead
to different ideas and observations.
Since this early part of your strategic planning efforts are all about information
gathering and knowledge building, the more experience you have in the room and the
greater the spread of departments and roles, the more insight you will be able to capture
when it comes to both your external and internal analysis.
You should also try and bring this process to life as much as you can. If you can
effectively get everyone engaged in the process early on, you’ll ultimately have a more
successful strategy and better execution success.
So, don’t just think about which tools you’ll use, but also consider how you will
complete them. You’ll find a lot of these tools and frameworks within Lucidity meaning you
can work through them together on-screen (remotely or in-person), filling them out step-by-
step and have all your work saved together in one place and looking great.
Tools for external analysis and understanding the market
PESTLE Analysis
PESTLE is both simple to use and understand, and comprehensive. It’s a tool that gets you to
list out all the external factors that could impact your business. The sections of the model
are Political, Economic, Societal, Legal and Environment.
LoNGPESTLE
This is an extension of PESTLE which overlays location as a consideration across all of the
PESTLE categories. You’re asked to consider how the impacts differ when you look at the
Local, National and Global contexts.
DESTEP
This is an alternative to PESTLE which has more emphasis on demographics. Here you will
consider the profile of the population and think about how that will impact your business –
age, education, gender, geographies, family statuses etc. The categories in DESTEP are
Demographics, Economic, Sociocultural, Technological, Ecological and Political/Legal.
Porter’s Five Forces
The Five Forces strategic tool will help you analyse your industry (or, indeed any industry or
market, say if you’re considering a new venture or a move into a new space). The tool helps
you consider all the forces at play in a competitive market and see what things will impact
growth potential. It’s a great tool for determining the potential profitability of a market.
Tools to understand your competitors
Four Corner Analysis
Four Corners is a great tool for analysing a chosen competitor company and provides you
with a succinct, single diagram of information and insight on that business. As the name
suggests, there are four sections to the tool that ask you to document the business’
motivations and drivers, their current strategy, the management assumptions (how the
leadership team perceive their position in the market) and their capabilities.
Perceptual Map
This is a great tool for mapping out where all of your competitors sit in the market. Although
this won’t help you capture lots of information on each company, it will give you an easily
understandable and digestible visual representation of the whole competitive landscape.
The diagram has two axis, typically (but not exclusively) price and quality, and the task is to
position all of your competitors along those axis in relation to how consumers perceive
them. You will also place your own brand on the graph and have a clear view of where you
sit in relation to the rest of the players in your market.
Tools for analysis of your own business
SWOT Analysis
Possibly the most famous of all strategic planning tools, SWOT stands for Strengths,
Weaknesses, Opportunities and Threats. There is no better place to start when it comes to
examining your business and starting to think about the future of your company.
SOAR Analysis
SOAR is another 2 x 2 matrix tool, and while it shares the Strengths and Opportunities
quadrants of a SWOT Analysis, it shies away from the negative Threats and Weaknesses and
instead opts for focusing on Aspirations and Results. So, on one side are the positives about
your business that can be exploited, and the other side has the vision of what you want to
achieve if you exploit those factors well. If you’re running workshops with different groups
in the business at different times, you may find the SOAR exercise would be better suited to
some groups rather than SWOT.
Porter’s Value Chain
This is an extremely valuable framework that can help you understand the value you create
for your customers and therefore determine your competitive edge. It asks you to capture
all the activities within the business that go into creating and delivering your product or
service, and comparing the cost of those activities to the value you create. This leads you to
your margin – and the higher the value of your product/service, or the lower your costs of
creating that value, the better your margin.
VRIO Framework
This is another strategy tool which will aid your understanding of how your business works
and the strengths that can be exploited for growth. Here you are mapping out the aspects of
your business that give you a competitive advantage. You’re asked to list what resources,
capabilities, products, partnerships – anything really – that are Valuable, Rare, Inimitable
and Organized. Thing of this as a list of your best of the best – all the great stuff you have
going for you.
BCG Growth-Share Matrix
This strategic tool, developed by the Boston Consulting Group, will help if you have a
number of different products or services. The 2 x 2 matrix has four boxes that describe
different statuses based on market share compared to potential market growth. The
quadrants are Stars (where you have high market share in a market with high growth
potential), Cash Cows (where you have high market share but it’s not a growing market),
Pets (low market share in a market that’s not got a lot of growth potential) and finally
Question Marks (where you have low market share in a market with high growth potential).
By understanding the profile of your products/services in this way you’ll start to get a good
idea of what to do with each in order to drive the overall growth of your business.
ADL Matrix
Like the BCG Growth-Share Matrix, the ADL Matrix is a tool to help you map out a portfolio
of products or services and truly understand each of them and their value to your business.
With this matrix you position each of your products or services in relation to their
competitive position (from weak compared to the competition all the way to dominant) and
the industry lifecycle stage (from an embryonic market to an ageing industry). The model
has different advice and suggested actions based on each possible position on the grid. It
helps you see how much time and attention to spend on which products or services – from
big pushes to gain market share, to completely abandoning, and everything in between.
