Introduction
Five Elements of Enterprise Strategy Analysis Method (also known as 5ES) is a popular method of analyzing business models and strategies. It provides helps those involved in strategy formulation understand the strategies from a broad and holistic view. It applies to both existing and proposed strategies and business models, and is widely used for both one-time strategic analysis and for periodic reviews.
Overview
The five elements of enterprise strategy analysis method can be broken down into five sections: External Environment, Internal Environment, Corporate Strategy, Market Strategies, and Tactics. Each section looks at different aspects of the company in order to gain a holistic view.
External Environment
The external environment looks at the larger macro environment in which the company operates and assesses how the environment might affect its strategies. This includes an analysis of the competitive environment, economic forces, legal/regulatory trends, as well as technology and social trends.
Internal Environment
The internal environment examines the current state of the corporate structure and its internal operations, and then looks at how these can be optimized to support the external environment. An example of internal analysis could include looking at the companys current organizational culture and structure, competencies and capabilities, processes, financials and so on.
Corporate Strategy
Corporate strategy is the overall direction the company takes in order to achieve its specific goals and objectives. It assesses how well the company is managing its external environment and internal operations in order to reach its goals. It then establishes a framework for how individual business strategies should be developed.
Market Strategies
Market strategies identify the target markets and then develop strategies to penetrate those markets in order to achieve the corporate strategy. This involves segmenting the market, developing products and services for the target customer, developing pricing models and positioning the products and services in the market.
Tactics
Tactics are the actionable steps the company takes in order to execute a market strategy. It typically includes elements such as marketing campaigns, sales channels and customer service.
Conclusion
The five elements of enterprise strategy analysis method provide businesses with a comprehensive view of the external and internal environment and how the business can use this information to create value. It helps ensure that businesses are aware of the relevant external factors that could affect their strategies, as well as identify and assess the internal capabilities and resources needed to execute successful strategies. By understanding their external environment, internal resources and capabilities and their customer base, businesses can leverage the five elements method to create strategies that work in their favor.
