Strategic analysis means the analysis of the competitive environment in terms of what it means for the corporate strategy.
The strategic analysis can be made using Porter’s 5-Forces Model. This model analyzes the following five factors that help in an industry’s analysis:
a. The threat of substitute products,
b. Bargaining power of customers,
c. Bargaining power of suppliers,
d. The threat of new entrants, and
e. The intensity of the rivalry.
The following must be kept in mind while using Porter’s 5-factor model:
a. Higher/Stronger barriers reduce competition,
b. Greater concentration implies lower competition,
c. Unused capacity results in intense price competition,
d. Stable market share implies less competition,
e. Greater price sensitivity in customer purchasing decisions results in greater competition and
f. More mature industries exhibit slower growth.