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Name: Analysis Without Paralysis
Rating: 4.1 (177 reviews)
Author: Babette E. Bensoussan

Babette E. Bensoussan

10 Tools to Make Better Strategic Decisions

4.1 (177 ratings)

19 mins

Brief summary

Analysis Without Paralysis by Babette E. Bensoussan is a guidebook that teaches us how to make effective business decisions by applying a structured approach to data analysis. It offers practical tools and techniques to avoid information overload and make informed choices.

Topics

Strategy Decision-Making Leadership Critical Thinking & Problem Solving

Table of Contents

Analysis Without Paralysis
Summary of 10 key ideas

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What’s in it for me? Ten Powerful Strategic Analysis Tools.

When making decisions for your business, it should come as no surprise that information is key. This is the difference between making a random guess, and making sound, strategic decisions.

Strategic analysis provides insights on the internal and external environment to identify issues you might encounter or opportunities you’d otherwise miss out on. It’s the essential foundation that high quality strategic planning is built on. But strategic analysis is more than just collecting data: it’s about processing that data into useful information about your situation, so you’re equipped to make the best strategic decisions.

In this Blink, we’re going to look at ten of the most impactful analysis tools that can empower you to make better and more strategic decisions for your business. You’ll learn about influential models like Porter’s Five Forces, Value Chain analysis, and PEST analysis.

Let's get started!

The Boston Matrix

Being realistic about your business's strengths and weaknesses is crucial, especially when evaluating which products to prioritize. Enter the BCG Growth-Share Matrix, often simply termed the Boston Matrix. Crafted in the 1970s by the Boston Consulting Group, this strategic management tool offers a method to categorize products using two pivotal factors: market growth rate and relative market share.

By measuring your products with these objective financial indicators, you can divide your products into one of four categories: Stars, Cash Cows, Question Marks and Dogs.

Your Stars are the products that have high growth as well as a high market share. Your customer base for these products still has room to grow, and though this would require more investment to maintain dominance, there is also a lot of potential.

Cash cows are your products that have slowed down in terms of growth, but saturate most of your market. These are the products that generate cash reliably that you can use to invest in others.

A Question Mark product line is one that is growing but doesn’t have a large market share yet. They require investment and strategy in order to keep growing, but you’ll want to keep close tabs on them.

Dogs have low growth and low market share. These are weak products that you probably want to consider divesting from.

The Boston Matrix is a great way to take a snapshot of your portfolio and identify where you should put your resources. But though it’s a good tool for quick, up-high analysis, it shouldn’t be your only tool for resource allocation decisions. It’s best to be used in combination with other techniques that help to give those findings context.

The Four Corners Model

In business, competition is ever-present. Competitor analysis aids in understanding rivals and crafting differentiated strategies to gain an edge. Always monitor current competitors and anticipate new ones, as the competitive landscape evolves.

Michael Porter, a Harvard Business professor, is renowned for developing a range of strategic analysis tools, including the Four Corners Model. This model segments information you’ve gathered on your competitors into four categories: Drivers, Assumptions, Strategies and Capabilities.

Financial Ratios

Whether you’re looking at your competition or working out how things are going at home, financial reports contain vital information for strategic decisions. Financial Ratios help to make sense of financial statements by converting raw numbers into meaningful indicators of business performance that anyone can understand.

There are many different ratios that measure things like activity, leverage, liquidity, and profitability. We can’t even begin to cover them all here, so let’s take a look at a couple of them, and how they can be used to understand a business more deeply.

Five Forces Model

Porter’s Five Forces is an analytical framework designed to evaluate competition within an industry and shape an effective business strategy. Like the Four Corners model, it was designed by Michael Porter. The difference is that it presents a broader perspective of industry environments.

Five Forces looks at five key areas within an industry. The first is Competitive Rivalry, that is, how intense your current competition is within an industry. Next is the Threat of New Entrants, or how easy it is for a new competitor to enter the industry. Third is the Threat of Substitutes. This is how easy it is for a product or service to be replaced by an alternative, such as digital downloads replacing CDs.

Scenario Analysis

Scenario analysis involves creating different hypothetical scenarios to explore the potential outcomes and implications of key strategic decisions. It is used to stress-test strategy and prepare for uncertain futures.

To conduct scenario analysis, first identify the key uncertainties and variables that will impact your business, such as technology changes, competitor moves, regulatory shifts, and economic fluctuations.

SWOT

SWOT analysis is a strategic planning technique used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture. It involves specifying an objective and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.

Strengths and Weaknesses are both internal factors. Strengths are capabilities, resources, and positive situations that support your objective. Weaknesses are lacks of capabilities, deficiencies, and negative situations that are harmful to your objective. A strength for your organization might be its workplace culture, but you might not have a well-developed marketing team or strategy, which would be a weakness.

Macro Environments

Businesses don’t operate in a microcosm. They exist in a broader environment, influenced by several macro factors. This is where PEST analysis comes in, which is a model to brainstorm the Political, Economic, Social, and Technological influences on a given business strategy. This model can also be expanded to include Environmental factors and Legal considerations.

When looking at the Political factors, you’ll want to assess government stability, policies, corruption, foreign trade, and other factors that might impact operations, particularly in a global trade setting.

Value Chain Analysis

Value chain analysis is a strategic tool used to analyze internal activities that contribute value to customers and competitive advantage to your business. The last of Michael Porter’s models, it divides a company’s internal activities into Primary and Support Activities.

Primary Activities are those directly involved in creating and delivering a product or service, for instance operations, inbound or outbound logistics, marketing, sales, and services.

Issue Analysis

Issue analysis involves identifying and evaluating potential problems and situations that will impact an organization’s strategy and strategic objectives, and finding solutions. One model for understanding Issue Analysis is known as the Policy Cycle.

The Policy Cycle begins with Identification. What challenges or potential areas of improvement are you facing, and why is that an issue? After you know what the issue is, you should thoroughly research it. Seek stakeholder opinion, collect data, and make sure you understand the causes of the issue.

Political Risk Analysis

When navigating the vast expanse of international business landscapes, understanding political risks becomes paramount. Among the tools used in political international risk analysis, the Delphi Method stands out. Originally developed by the RAND Corporation during the Cold War, this technique is about achieving consensus from a panel of experts.

Participants, often anonymous to one another, provide feedback on a specific issue, like potential political shifts or legislative changes in a foreign market.

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What is Analysis Without Paralysis about?

Analysis Without Paralysis is a practical guide to the ten most powerful strategic analysis tools that will help you make better and faster business decisions. It is a simple and straightforward tour through models such as Porter’s Five Forces, PEST, and SWOT, teaching you when and how to utilize these powerful techniques.

Who should read Analysis Without Paralysis?

Managers who want to build a competitive strategy
All types of entrepreneurs
Business Owners wanting to turn data into information

About the Author

Babette E. Bensoussan is a management consultant and former professor at The Wharton School who specializes in analysis for competitive advantage. She has over 30 years of experience advising executives on strategic decision-making and is the bestselling author of several business books, including The Mindset of Success. Bensoussan provides training programs on strategic analysis to leading Fortune 500 companies through her firm Zenger Folkman.

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Entrepreneurship Management & Leadership

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