Evaluate the importance to BFB of strategic analysis when making strategic decisions.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2021). The mark or mark type is shown in brackets.

1. [Knowledge] Definition: the process of conducting research into the business environment within which an organisation operates, and into the organisation itself, to help form future strategies.
2. [Knowledge] Explanation of strategic analysis and its techniques – SWOT, PEST, Boston Matrix, Porter's 5 Forces, core competencies.
3. [Knowledge] Place of strategic analysis techniques in strategic management i.e. come before strategic choice.
4. [Knowledge] Need to understand the external environment – requiring a detailed PEST analysis.
5. [Application] SWOT applied to BFB: Strengths e.g. design and quality of cycles evidenced by award winning designs. Weaknesses e.g. lack of contingency planning, inadequate QA systems, high gearing. Opportunities e.g. mountain cycles. Accessories with high profit margins. Threats e.g. government fiscal / monetary policy.
6. [Application] PEST applied to BFB: Economic e.g. change to exchange rate/trade relations, government policies.
7. [Application] Relevant application of other techniques e.g. Boston Matrix.
8. [Application] Link between SA and introduction of lean production.
9. [Application] Core competencies – cycle design.
10. [Analysis] Analysis of how strategic analysis might guide strategic decisions: Identification of weaknesses that need to be addressed when making decisions or alternative sought e.g. financing. Anticipating changes to the external environment will enable BFB to take decisions to reduce risk and take advantage of opportunities.
11. [Analysis] SA will help reduce the risk of decisions taken by BFB as it will help BFB build on their core competencies and strengths and highlight weaknesses that need to be resolved.
12. [Analysis] SA takes time to do in terms of management focus, reducing time available for other tasks.
13. [Analysis] Boston Matrix as part of product portfolio analysis could help identify cash cows and dogs. This information can be useful in ensuring that BFB maintains a balanced product portfolio and identify products for divestment.
14. [Analysis] Porter's Five Forces: Power of buyers, suppliers, threat of substitutes, barriers to entry and competitive rivalry helps BFB make decisions about markets to enter and reduces risk by considering factors that affect success.
15. [Evaluation] Importance of understanding where the business is now in order to generate ideas and/or support for expansion.
16. [Evaluation] Judgement/evaluation about usefulness of strategic analysis techniques supported by argument.
17. [Evaluation] Elements that the evaluation/judgement might depend on such as: BFB operate in a dynamic environment so analysis may quickly become outdated. Subjective nature of SWOT analysis. An assessment of the importance of timing and a timescale in carrying out analysis. Subjective interpretation of the models – one manager's opinion of SWOT may be very different to another's. Critical comments on the techniques.
18. [Evaluation] Evaluation of other factors that influence options such as: Comments that strategic analysis on its own is not enough to fully support a decision. Attitude of directors Attitude to risk
19. [Evaluation] Justification of most useful technique(s) with supporting argument. Ranking the usefulness of the techniques in relation to expansion plans. Weighing up importance of other stages in strategic management especially objectives and choice techniques in relation to strategic analysis.