Unit 6.2 — Strategic analysis
Learning outcomes (from the 9587 syllabus). This note is complete when every bullet below is covered.
Learning outcomes
- Strategic purpose: mission, vision and values; importance in the strategic management process
- Corporate governance: importance; emergence of business ethics and corporate social responsibility as part of corporate governance; ethical issues (conflict of interest; fairness and honesty); consideration in decision-making
- Analysis of internal environment: resources, capabilities, core competencies, activities; SWOT (Strengths and Weaknesses)
- Analysis of external environment: PESTLE; Porter’s Five Forces; SWOT (Opportunities and Threats)
Running example: Swift Logistics analyses where it stands — inside and outside — before choosing its strategy.
Big picture
In plain English: before choosing a strategy, a business must understand its purpose (mission/vision/values), its own strengths (internal analysis) and the outside world (external analysis). This is strategic analysis.
Analogy: strategic analysis is checking your compass (mission/vision), your own fitness (internal), and the weather and terrain (external) before choosing a route up the mountain.
Core content
1. Strategic purpose: mission, vision and values
- Mission — why the business exists (its purpose).
- Vision — where the business wants to be in the future.
- Values — the principles that guide how it behaves.
Importance: they give direction, guide decisions, motivate staff, and communicate what the business stands for.
Swift’s mission is “to connect people and businesses through fast, reliable delivery”; its vision is “to be Singapore’s most trusted courier by 2030”; its values are speed, reliability and care. These steer every strategic decision.
2. Corporate governance
Corporate governance = the rules and systems by which a company is directed and controlled.
- Importance: good governance protects shareholders, ensures accountability and honesty, and builds trust with investors and the public.
- Business ethics (right vs wrong conduct) and CSR (responsibility to society and the environment) are now part of governance.
- Ethical issues include:
- Conflict of interest — when a manager’s personal interest clashes with the company’s interest.
- Fairness and honesty — treating stakeholders and reporting truthfully.
Swift’s board ensures its directors do not award contracts to their own family firms (conflict of interest) and reports its accounts honestly. It also acts on CSR by using electric vans to cut emissions. These governance choices build trust with clients and investors.
3. Analysis of the internal environment
| Concept | Meaning | Example |
|---|---|---|
| Resources | What the business has (physical, financial, human, intangible) | Swift’s vans, cash, couriers, software |
| Capabilities | What the business can do with its resources | Swift’s ability to sort and deliver fast |
| Core competencies | What it does better than rivals | Swift’s route-optimisation and same-day capability |
| Activities | The value-adding steps in its operations | Collection → sorting → delivery |
SWOT — Strengths and Weaknesses: internal factors that help (strengths) or hinder (weaknesses).
4. Analysis of the external environment
PESTLE (see Unit 1.5) — the macro-environment: Political, Economic, Socio-cultural, Technological, Legal, Ecological.
Porter’s Five Forces — the industry environment:
- Rivalry among existing competitors
- Threat of new entrants
- Threat of substitutes
- Bargaining power of buyers
- Bargaining power of suppliers
Swift’s Five Forces analysis: rivalry is intense (many couriers); the threat of new entrants is high (low start-up cost); substitutes exist (own delivery, post office); buyers have power (corporate clients negotiate hard); suppliers (fuel, vans) have moderate power. This tells Swift the market is tough, so it must differentiate to survive.
SWOT — Opportunities and Threats: external factors that help (opportunities) or threaten (threats).
Analysis & evaluation points (AO3/AO4)
- Mission and values only matter if they are real — a slogan on the wall changes nothing unless decisions follow it.
- Ethics vs profit can conflict — acting ethically may cost money short-term but protects reputation long-term.
- Core competencies are the real source of advantage — resources alone are not enough; it is what the business does better that matters.
- Five Forces shows industry attractiveness — weak forces mean easier profits; strong forces mean tough competition.
Language bank: however · on balance · it depends on · trade-off · in the long run ·
Worked examples (PEEL)
PEEL = Point → Explain → Example → Link. Use this structure for every written answer.
Worked example 1 — “Explain” (6 marks)
Question: Explain the difference between resources and core competencies.
- P (Point): Resources are what a business has; core competencies are what it does better than rivals.
- E (Explain): Resources are assets (money, machines, staff), while core competencies are distinctive capabilities built from those resources that competitors find hard to copy.
- E (Example): Swift’s vans and software are resources; its superior route-optimisation that enables same-day delivery is a core competency.
- L (Link): Core competencies, not resources alone, are the real source of competitive advantage.
Worked example 2 — “Evaluate” (10 marks)
Question: Evaluate the usefulness of Porter’s Five Forces to a business.
- P (Point): Five Forces helps a business judge its industry’s attractiveness.
- E (Explain): By analysing rivalry, new entrants, substitutes, buyers and suppliers, the business sees where competitive pressure comes from and how to position itself.
- E (Example): Swift learns that strong buyer power and easy entry make the courier market tough, so it differentiates to reduce price competition.
- L (Link): This improves strategic decisions.
- Evaluate (AO4): However, Five Forces is a snapshot and ignores rapid change (technology, regulation) and internal factors. On balance, it is best used with PESTLE and SWOT for a fuller picture.
Application bank (Singapore quick reference)
| Idea | Singapore example |
|---|---|
| Mission/vision/values | SIA’s vision of world-class service; DBS’s purpose-driven culture |
| Corporate governance | SGX listing rules; MAS governance standards for banks |
| CSR | DBS and UOB green financing; CDL’s sustainable buildings |
| Five Forces | Grab analysing ride-hailing rivalry and driver/buyer power |
Exam technique
- How it appears: Paper 2 Section B essays ask you to analyse a case business using these tools before recommending a strategy.
- Model skeleton for “strategically analyse”: state purpose (mission/vision) → internal (resources, capabilities, core competencies, SWOT S/W) → external (PESTLE, Five Forces, SWOT O/T) → conclude where the business stands.
- Common pitfalls: describing tools without applying them to the case; confusing resources with competencies; listing SWOT items without linking to strategy.
Self-test checklist
Essay practice: “Evaluate the view that external analysis is more important than internal analysis when forming strategy.” (25 marks)