Businesses operate in external environments which can create opportunities which a business can exploit. The environment can also create threats which are capable of damaging a business. It is therefore very important for a business that is willing to exploit the opportunities to have the right resources and capabilities in place. A business strategy should therefore have a part that is concerned with ensuring that resources and competencies are understood and properly evaluated. This process is known as strategic audit CITATION Whe11 l 1033 (Wheelen, 2011).
The following is the summarized process of conducting a strategic audit: Resource Audit- his stage aims at identification of resources available to a business. Resources can be from different sources –some are owned by the company for example machinery, plant, outlets and trademarks. Other resources are obtained from partnerships, joint ventures among others. Value Chain Analysis – this stage seeks to identify and describe the activities taking place in a business relating them to the analysis of competitive strengths of the business. There are primary and supportive activities in any given organization. Core Competence Analysis – these are the activities that are critical to a business achieving its critical advantage. The role of this audit is to identify possible competitors to the business and define strategies to deal with competition. Performance Analysis- all the above mentioned analysis helps in identification of the strategic capabilities of the business. The questions to be asked when undertaking performance analysis are, “how have the resources that were deployed in the business changed over time?” this is known as historical analysis, “how do the resources and capabilities of the business compare with others in the industry?” industrial norm analysis, “how do we compare with our close competitors and how has the financial performance of the business changed with time. This is known as Ratio Analysis. Portfolio Analysis must also be undertaken as it seeks to strengthen business portfolio and identifies and highlights units that require appraisal. SWOT analysis will also be useful towards identification of Strengths, Weaknesses, Opportunities and Threats. It is a very important tool for auditing the overall strategic position of any firm and its environments.
Tiger direct is a retail electronics stores dealing with sales of electronics, tablets, phones, office supplies, video games and more. The bulk of the business performed by the company is based on web and catalog computer electronic sales. The company has put emphasis on rebate marketing in order to lower its prices. Tiger direct also operates business to business channels and retail stores and it has distribution centers, corporate sales offices and retail stores in different states in USA and others cities in the world. The following is the company’s SWOT analysis CITATION Shu10 l 1033 (Shultz, 2010).
Strengths: the company is a publisher of titles for Microsoft Windows and Apple Macintosh which are some of the world’s famous and outstanding brands. The company has also collaborated with IBM, HP eMachines among other brands. The company has multiple websites making accessibility for its products and services flexible. The online purchasing makes the products easily available for consumers and businesses. It is one of the leading electronic retailers in the world with more than 100 outlets.
Weaknesses: tiger direct has limited room for expansion and too few services. The cost of employment for maintenance of equipment is high and the company’s structure is very complicated making operation costs to be high. The company’s websites are also too busy and has too many catalogs to choose from.
Opportunities: the company is in a position to explore other opportunities to grow strong financially. It is also promoting more discounts through online purchasing and has adapted the current theories of management to match the technological marketing world. The company is capable of upgrading its customer’s computers leading to increment in revenue. There is high growth potential as a result of newer services.
Threats: the cost of products development is becoming high every day and there is bad product design from different producers. There is cut throat competition from companies like Best Buys and Wall-mart and this might lead the company to go out of business.
Best buy is the largest multi-channel consumer electronic retailer in the world. It has brunches and stores in North and South America and it among the top ten retail websites in the US. The company is enjoying a high percentage of customer loyalty of its kind in the world. The vision of the company is to make life fun and easy for the customers. Its mission is to treat each and every customer as unique individuals by meeting their needs and energizing the employees and at the same time maximizing profitability.
Strengths: Best buy company has is focused on customer service and variety and this has led into increment of profits. It has pricing power over its customers and suppliers and it is blessed with wide portfolio of store brands and regional banners strengthened by knowledge of distribution and logistics. The national and international distribution points make the company familiar with international and national markets. The company also has a wide customer base, nationwide supply chain capability, and customer loyalty.
Weaknesses: there is short labor supply to the company and the marketing expertise is also underdeveloped. The company has been forced to reduce prices in order to match competitors and this has put negative pressure on prices and revenue. The name of the company is also associated with the company’s initial positioning statements as sale to liquidate merchandise.
Opportunities: acquisition of other successful companies for example the leverage acquisition of Albertson. The company also focuses on higher margin retail business and this is as a result of efficiencies from centralized operations. It has a well-coordinated national supply chain and it enjoys long term relationships with suppliers. The business market is also bigger than the consumer market.
Threats: there is high competition from other companies like Tiger direct and Wall-mart. The company is at a high risk of losing customers as a result of whole sale business. The company had also been forced to standardize its stores as a result of centralization of operations. There is also much pressure to reduce the company’s prices.
Both organizations are retailers in electronics and they use internet to gather information and sell their products and services. The organizations are constantly trying to gain more and more customers.
Businesses strategic audits are used to assess the internal processes and move towards the strategic goal. Establishment of strategic audits and plans helps the auditors by giving them baseline for their work. In order to identify strategic risks and assess the current strategy, a company must undertake a strategic audit. It also helps in identification in implementation of formulated strategies CITATION Whe12 l 1033 (Wheelen, 2012).
Wheelen, T. L., & Hunger, J. D. (2011). Concepts in strategic management and business policy. Pearson Education India.Schultz Jr, J. J., Bierstaker, J. L., & O’Donnell, E. (2010). Integrating business risk into auditor judgment about the risk of material misstatement: The influence of a strategic-systems-audit approach. Accounting, Organizations and Society, 35(2), 238-251.
Wheelen, T., & Hunger, D. (2012). Strategic Management & Business Policy Achieving Sustainability. Corporate Governance, 1, 17.