There are a lot of strategic and management tools that help businesses. All of them very helpful. In my view, 5 tools that businesses can utilise regularly and make substantial key differences are:-
1. SWOT Analysis
SWOT analysis is particularly powerful as it helps businesses understand both internal and external factors that affect them with little thought. By understanding their strengths and weaknesses and seeing what opportunities and threats there are make businesses well placed to create a strategy that can push the business ahead of the pack.
2. The McKinsey 7S Framework
The 7S Framework can be used in a variety of situations to ensure all departments of the company are working in harmony. This framework talks about 7 internal features (namely, Strategy, Structure, Skills, Staff, Systems, Style & Shared values) of an business that need to be aligned and can be used to analyse effects of changes, align different parts of the organisation, improve performance, etc.
3. Porter’s Value Chain
This is a very useful tool in determining how your business creates value and what changes can you make to enhance the value created. Understanding this is critical to develop your USP and Michael Porter has given a general purpose value chain that Businesses can use to analyse their activities and determine the connections and understand the value source in your company. This model looks at systems and how inputs are turned into outputs that are purchased by the customer. It looks at primary activities of a company consisting of inbound logistics, operations, outbound logistics and services and also the support activities of infrastructure, human resources management, procurement and technology development. The Primary Activities are related to the creation of the final product or service and the other activities support the primary ones. Find the connections between the activities which are key to determining the Organisation’s competitive advantage and opportunities available to increase the value of the business.
4. Core Competence Analysis
This tool helps Businesses to build a sustainable competitive advantage. It can be utilised both at personal and corporate levels and provides ability to develop a unique selling point, that makes a difference. To determine true competencies, C K Prahalad & Gary Hamel gave 3 tests:-
– Is your competence relevant to the customer? If not, it is not a core competency.
– How easy is it to imitate? If it is, then it is not a core competency
– Does it open various markets or only a few niche ones? If a few niche ones, then it is not a core competency.
To build true core competencies is a process and you need to be working regularly to developing these.
5. The Boston Matrix
This is a key tool to determine where to focus your effort and investment on. This matrix is a simple visual and effective way to analyse which products/services and places these into one of the four categories based on market share and market growth. The 4 Categories, namely, Star (high growth, high market share), Cash cow (low growth, high market share), problem child/question mark (high growth, low market share) and dog (low growth and market share) help companies to determine which products/services are cash neutral, cash absorbing or cash generating and to build a strategy if to hold, divest, build or harvest.