Strategic analysis

Strategic analysis answers two questions before any strategy is chosen: what is happening outside the firm (opportunities and threats) and what can the firm itself do well or poorly (strengths and weaknesses). External analysis uses PEST (political, economic, social, technological) for the broad environment and Porter's five forces for the industry; internal analysis uses the resource-based view and value chain analysis. Worked example: a budget hotel chain sees rising domestic tourism (opportunity) and new online booking platforms (threat to its direct sales), while its strength is prime locations and its weakness is an outdated booking system — the analysis already points toward a strategy of fixing the booking system to capture the tourism opportunity, before any formal SWOT matrix is drawn.