Strategic Analysis and Planning: formula sheet

Key formulas

Planning process sequence

Direction (vision, mission, objectives) → Environmental and internal analysis → Strategy formulation and choice → Implementation → Evaluation and control

Write in this order. Feedback from evaluation goes back to earlier stages, so planning is continuous.

Three levels of strategy

Corporate (what businesses?) → Business (how to compete?) → Functional (how to support?)

Use the guiding question to place any example at the right level.

Level and decision-maker

Corporate: board and top management | Business: SBU heads | Functional: department heads

Time horizon shortens and detail increases as you move down the levels.

Hierarchy of direction

Vision → Mission → Goals → Objectives → Strategies

Moves from broad and long-term to specific and short-term. Use it as the skeleton of any descriptive answer.

Vision vs mission

Vision = where we want to be; Mission = why we exist and what we do now

Vision is future-oriented and aspirational. Mission is present-oriented and practical.

Goals vs objectives

Goals = broad, often qualitative, no fixed time; Objectives = specific, measurable, time-bound

Objectives are the quantified form of goals.

SMART test for objectives

Specific, Measurable, Achievable, Relevant, Time-bound

A common checklist for a well-framed objective. Some texts use slightly different words for A and R.

Features of a good mission statement

Customers, products or services, markets, values, and the organisation's distinct approach

Not every statement covers all elements. Use them as a checklist, not a rule.

PESTEL factors

P (Political) + E (Economic) + S (Social) + T (Technological) + E (Environmental) + L (Legal)

Macro environment framework. Environmental means ecological factors such as climate, pollution norms and sustainability. Legal covers laws such as the Companies Act, labour codes and competition law.

Porter's Five Forces

Threat of new entrants + Bargaining power of suppliers + Bargaining power of buyers + Threat of substitutes + Rivalry among existing competitors

Micro (industry) framework. The stronger the forces together, the lower the industry's profit potential.

Environment layers

Environment = Macro (general) + Micro (industry/task)

Macro affects all firms; micro affects firms in a particular industry. Internal environment is studied separately.

Scanning outcome

External factor → Opportunity or Threat → Input to SWOT

Every identified factor should be classified and linked to the firm.

Primary activities of the value chain

Inbound logistics → Operations → Outbound logistics → Marketing and sales → Service

These activities are directly involved in creating and delivering the product.

Support activities of the value chain

Firm infrastructure + Human resource management + Technology development + Procurement

These help the primary activities and run across the whole firm.

Margin in the value chain

Margin = Total value created − Total cost of performing the activities

Advantage comes from performing activities at lower cost or in ways that raise the value buyers see.

Resource tests (VRIO)

Valuable, Rare, Imitation-costly, Organised to exploit

A resource meeting all four tests can support sustained competitive advantage. Meeting only value gives parity.

SWOT classification rule

Internal = Strengths, Weaknesses; External = Opportunities, Threats

Ask: is this inside the firm's control? If yes, it is a strength or weakness.

Relative market share

Relative market share = Firm's market share ÷ Market share of the largest competitor

A value above 1 means the firm is the market leader (high share). A value below 1 means it trails the leader. Many texts use 1 as the cut-off between high and low.

Market growth rate

Market growth rate (%) = (Current year market size − Previous year market size) ÷ Previous year market size × 100

Compare with a cut-off given in the question (often around 10%). If none is given, state the cut-off you assume.

GE weighted score

Score of an axis = Σ (Weight of factor × Rating of factor)

Weights on each axis should add up to 1 (or 100%). Convert the total score to high, medium or low using the bands given.

BCG strategy by box

Star → build/hold; Cash cow → hold/harvest; Question mark → invest selectively or divest; Dog → divest/harvest

State the action after classifying. Marks are lost if you only name the box.

Ansoff growth options

Existing product + existing market = penetration; existing product + new market = market development; new product + existing market = product development; new product + new market = diversification

Risk rises as you move away from the existing product and market.

Four grand strategies

Stability | Growth | Retrenchment | Combination

Name the family first, then the variant. Examiners reward this structure.

Growth routes

Intensification + Integration + Diversification + Mergers, acquisitions and alliances

Intensification covers market penetration, market development and product development.

Retrenchment variants

Turnaround → Divestment → Liquidation

This is an order of severity. Liquidation is the last resort.

Integration direction

Backward = towards suppliers; Forward = towards customers; Horizontal = towards competitors

Backward and forward are together called vertical integration.

Diversification types

Related (concentric) vs Unrelated (conglomerate)

Related diversification builds on existing skills, technology or markets.

Strategic choice steps

Identify alternatives → Evaluate against criteria → Select → Plan contingency

Use this as the skeleton for any choice question.

Quick revision

• Strategy works at three levels: corporate, business and functional.
• Strategic planning moves from direction setting to analysis, choice, implementation and control.
• Vision says what the company wants to become; mission says what it does and for whom.
• Objectives should be specific, measurable and tied to the mission.
• Environmental scanning looks outside the firm for opportunities and threats.
• Internal analysis looks at resources, capabilities and weaknesses.
• SWOT joins internal strengths and weaknesses with external opportunities and threats.
• Portfolio models help decide which businesses to grow, hold or exit.
• Corporate strategies include growth, stability, retrenchment and combinations of these.
• Strategic choice means comparing options against objectives and resources.
• In a case answer, always end with a clear recommendation backed by the facts.

Common mistakes

• Mixing up corporate and business strategy Fix: Corporate asks which businesses to be in. Business asks how to compete in one of them.
• Listing process stages in the wrong order Fix: Remember that you cannot choose a strategy before you know direction and analysis, and you cannot review before you implement.
• Treating vision and mission as the same thing. Fix: Anchor on time and question: vision is future and what we want to become; mission is present and what we do and for whom.
• Writing a vision with figures and deadlines. Fix: Keep the vision aspirational and long-term. Put numbers and dates in objectives.
• Listing PESTEL headings with generic definitions and no link to the company. Fix: For each factor, quote or use a case fact and state its effect on that firm.
• Confusing macro and micro environment, for example placing competitors under PESTEL. Fix: Remember: PESTEL affects every industry; competitors, suppliers, buyers and substitutes belong to the industry (micro) environment.
• Putting external factors such as a government policy or a rival's move under strengths or weaknesses. Fix: First ask whether the firm controls it. If not, it is an opportunity or a threat.
• Writing generic points like 'good management' with no link to the case. Fix: Use specific evidence from the case, such as a plant utilisation figure or a named brand.
• Using absolute market share instead of relative market share in the BCG matrix. Fix: Always divide the firm's share by the largest competitor's share before deciding high or low.
• Naming the box but giving no strategy. Fix: After every box, add the action: build, hold, harvest or divest, with a reason.

Exam tips

• Answer process questions in numbered stages with a short heading each; examiners check order and completeness.
• For distinguish questions, use points such as decision-maker, scope, time horizon, nature and example, covering each level on every point.
• In case questions, quote the fact before naming the level.
• Add a brief Indian company illustration where it fits, without inventing figures.
• Link this topic to vision and mission and to the strategic management process in the same answer when the question allows.
• Write distinction answers as a short table-like list of points: time frame, nature, question answered, and how often it changes. Use plain lines, since presentation matters less than clear points.
• In case-based questions, classify each given statement first, then justify with one reason from the facts.
• Always add one Indian example, even an illustrative one, to show application.