The present article contains a review of the current problems concerning the strategic analysis of the commercial organization’s external environment. A processing algorithm for the external environment strategic analysis of the trade organization is proposed, taking into account the resource-competency approach to the matter. The article also includes a methodical recommendations for the execution of a such analysis.
The complicated internal and external environment in which the modern trade organization is functioning is a key variable for its successful financial and economic activities and its relations with its suppliers and clients. There’s a constant resource exchange with the external environment in order to provide the organization’s economic survival and also a constant risk of not accumulating the key resources from the external environment which can turn into a great thread to the potential and the very existence of the organization.
In the conditions of a market economy in development, it’s crucial for the organization’s successful management to find an elaborate growth strategy, based on the strategic analysis of its key strengths, priorities and goals and their relation to both the internal and external environment of the organization.
The external environment analysis can provide vital information in order for the management to take key decisions for the organization’s successful short and long term interaction with its external environment, therefore keeping the potential of the organization at a level, sufficient enough to achieve its strategic goals or to react swiftly to the changes of the environment. This is why we find the strategic analysis of the external environment to be a very important tool available to the trade organization’s management in order to establish a control system for the external processes and resources, minimizing the entrepreneurship risk, gaining influence on its suppliers and competitors and increasing its product demand.
The elaboration of a scientific basis for the strategic analysis of the organization’s external environment on a national market level comes down to the implementation of suitable methodology and approach to the research of the matter. The general theoretical problems of a such analysis are already studied and can be found in the works of such internationally recognized authors as Henry Mintzberg, Henry Porter, Peter Doyle, Arthur Thompson, Alfred Chandler, Kenneth Andrews and others. The strategic management problems are subject of the publications of many Russian scientists as well, such as V. Ahripov, O. Vikhanskii, B. Riseberg, V. Markov, V. Harchenko, S. Kuznetzov and others. A study of the current problems of the trade organization’s activity, resource and expertise analysis has been conducted and can be found on the works of some contemporary Russian authors: M.Abriutin, L.Volkov, L. Zinin, A. Karpov, L. Petrov, M. Sorokin, E. Karpenko, A. Friedman, L. Pidlipin and others.
However, despite the numerous research works in the abovementioned field, the problems of processing such analysis in the conditions of a limited financial capability and unstable legislation governing a local market hasn’t been done.
In the field of economics, a stable definition of the term “strategic analysis” has yet to be defined. Some authors describe the term as an aggregate of functions, elements and stages. This logical “looseness” of the definition of the term is due to the lack of consensus among the authors regarding the nature of the strategic analysis with its abovementioned stages, functions and elements, how should it be differentiated from other types of economic analysis of the external environment like the competitor analysis or the portfolio analysis.
The majority of the authors however share the same view over the purpose of the strategic analysis — to obtain an evaluation on the key factors influencing the present and future state of the organization and the influence over the organization’s strategic choices. According to some of the abovementioned authors (Pidlipin, Zinin, Karpov and others) the strategic analysis of the trade organization’s external environment contains several stages roughly described as preparative, analytical, ranking or arranging, and final or conclusive.
The “preparative” stage is the basis of the analysis. The focus here is on the information gathering, the goals of the organization, the relevance of that information to the goals defined, rather than on the actual analytical actions. An input information mass is therefore created, defined, structured even shaped by the aims of the organization. The second stage is the actual analysis of that input information, its indicators, exponentials and key factor interactions. This is when the key variables and directions of influence are defined. An analysis and evaluation of both the internal and external competitive factors is to be executed as well on this stage of the strategic analysis in order to achieve a complex view and possibly an estimation of the organization’s financial and nonfinancial indicators. [3. p80]
This complex approach can provide support basis for the strategic decisions that are to be taken, throwing light on the relations between the unstable external environment factors and the internal ones (resources, expertise, competency, know-how and others). Therefore the complex systematical approach to the strategic analysis should be considered a worthy alternative to other approaches.
Taking into consideration the diversity of the methods an approaches to the strategic analysis, for its successful execution an algorithm implementing the Resource-competitive approach, STEP-analysis, Michael Porter model and main competitor’ s pivot diagram can be used. Applying such an algorithm will allow one to make deductions from both the external and internal environment of the trade organization.
A brief resume of the strategic analysis and all of its stages of the commercial organization’s external environment is provided below. It’s developed on the basis of the different methods of analysis conduction.
The first preliminary or preparative stage encloses the actions of gathering and systematization of the information concerning the organization’s resources (ex. equipment, human resources, innovation and finance potential, market state and requirements and the organization’s competitiveness on that market) so a consistent input is to be formed.
The aim of second stage of strategic analysis is to obtain an evaluation of the organization’s potential, this includes its resources, management system, the main markers of its financial and economic activity and to determine the main directions of further analysis of the external environment. That’s why we find appropriate to analyze as follows: the availability and application of the organization’s equipment, its current assets, intangible assets, it’s sales areas, management system, human resource potential, the structure and dynamics of its turnover, its main financial and economics markers and the organization’s marketing system.
The third stage — the strategic analysis of the organization’s competitive advantages we find most appropriate to implement the following methods: STEP-analysis of the organization’s activity, in order to obtain an estimation of the range of the external environment’s influence on the organization; external environment analysis implementing the Michael Porter model, in order to provide an overview of the competitive forces on the market and therefore to set a milestone for the organization’s competitiveness; main competitor’ s pivot diagram allowing to visualize end to perceive the organization’s market positioning compared to its main competitors.
The selection of analysis method is determined mainly by the need to estimate the organizations key advantages, so both quantative and qualitative approaches are needed in order to obtain a high reliability of the analysis’ deductions and results. On their basis as a result of that third stage, one can reliably estimate the resources needed and to define the organization’s competency end expertise.
The fourth stage — the resource-competency analysis contains as follows: a definition and evaluation of the organization’s threshold resources and competencies, of its unique resources and key competencies, a matrix analysis of the interconnections between the separate resources and competencies. The prioritization of the organization’s competencies and resources depends mainly on the organization’s size and some other factors.
The ranking or arranging of the key competency related to the competitiveness of the organization is the final stage on the basis of which the prioritization of the strategic directions of development of the organizations can be done.
Given the present conditions, the strategic analysis of the commercial organization’s activity is a complex study, aimed at the evaluation of the organization’s perspectives. Its main goal is to provide a sound base, a support for the strategic management decisions. The external environment analysis can help the making those decisions in a more effective and successful way and to establish successful algorithm of interaction between the organization and its external environment, both in short and long term perspective.
At present, the resource-competency approach is closely examined in the works of both foreign and local Russian authors. The implementation relevance of the resource competency approach in the external environment analysis is determined most of all by the search for new long-term competitive advantages on the stock and services markets and for new solutions in the field of the resource theory. As a scientific field of research in management it is focused on the explanation of the possible differences in the results of the activity of the different organizations with market positions determined by their current resources and competencies.
The difference of the approach is determined by the estimation of more than one source of success for the organization, the resource theory determines that the organization itself is a key factor for that success, and therefore it’s not that closely tied only to market positioning. The organization is viewed as an aggregate of controllable material and ideal property, know-how, expertise and competencies.
The interlink between the organization’s resources and competencies can be defined by use of different methods of analysis (matrix, model, etc.) which can provide one with a visual perspective of the organization’s key priorities, its strategic goals compared to the present external environment at a given time. [5, p.28]
Despite the relatively vast implementation of methods of economic analysis in the field of commerce, the sheer methodology and organizational aspects of strategic analysis are still to be studied and implemented on a practical level. One of the main reasons for that is the lack of legislation and practices.
By the authors opinion, the threshold competencies of the retail trade organizations can be defined as follows: marketing competencies (market knowledge, key market players, market tendencies and perspectives, the ability to foretell, to make a reliable prognosis on the market development; organizational competencies (the expertise and skill required to assure proper staff organization at the sale points); branch competencies (knowledge on the basic principles of retail trade); corporate and organizational culture (formation of common values and rules among the staff); staff competencies (basic staff know-how and financial and economic knowledge).
The organization’s basic key competencies can be defined as follows: marketing competencies — reliable market information; organizational competencies — the presence of an effective planning system an effective trade process management; branch competencies — knowledge and expertise over the trade process on all levels of the structure of the organization; corporate culture — the definition and implementation of common values among the staff; personal competencies — the availability of a staff with an appropriate trade formation and the possibility of obtaining such.
On a practical level the main goal is for the organization to define its most important resources and competencies which then will serve as a sound base for its economic success. The defining process is in fact a proces of estimation of the key external and internal factors and their interaction. This interaction can be described by the means of a different methods of mathematical analysis. The authors find however most suitable for that purpose the method of matrix analysis. It can provide valuable date on the stock properties and their relation and dependence on the expertise, knowledge, know-how, of the staff both as a team of individuals and individuals. On the base of matrix analysis one can make deductions and conclusions on the organization’s key competencies [2, p74].
The result of the analysis should therefore contain not only conclusions on the current configuration of the business system, but a determination of the key points of optimal effectiveness of the resources and efforts applied in the field of commerce as well.
The resource-competency approach provides a reliable estimation on both the present competencies and resources of an organization and the optimal future ones, that the organization should develop in order to achieve effectively its strategic goals.
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