A strategic audit is an in-depth review to determine whether a company is meeting its organizational objectives in the most efficient way. Additionally, it examines whether the company is utilizing its resources fully. A successful strategic audit is beneficial to any company. It assesses various aspects of a business and evaluates and determines the most appropriate direction for the company to move toward in achieving its goals. Complete a strategic audit utilizing six phases.
Conduct a full assessment of all resources owned or allocated by the business that are utilized to carry out organizational objectives. Cash balances and capital are included in this tally. Determining resources requires accounting for physical property such as buildings and lots. Additionally, categorize human resources by assessing staffers' skill set. Also account for intangible resources such as reputations and brand name power.
Inspect all business activities to determine how each one contributes or hinders organizational objectives. M.E. Porter separated activities into two categories: primary and support activities. Primary activities consist of in-bound and out-bound logistics, or materials and products coming in and moving out of the company. Primary activities also include operations, marketing and sales. Support activities are made up of human resources, procurement and infrastructure.
Determine the core competence that distinguishes your company from its competitors. Traditionally, there are four core competencies: quality, service, cost and flexibility. Quality-driven organizations focus on carving a niche by supplying the best quality products and developing a reliable and trustworthy reputation. Alternatively, a cost-driven strategy involves offering products or services more cost-effective than the competition.
Evaluate the performance of the company against established information obtained in the earlier phases. For example, with full knowledge of all company resources, gauge whether the business is utilizing those completely or whether there are areas that need improvement. Performance evaluations can consist of comparing past performance with current performance or assessing and measuring against competitors.
Inventory the overall securities, investments and business units of the company and analyze them in relation to risk vs. return. A portfolio analysis allows companies to understand better which areas to highlight and which areas to phase out. This criterion can provide information through multiple resources to identify products that are not selling well. This enables you to allocate funds and resources more efficiently to the products or services that offer a larger return.
A SWOT analysis stands for strengths, weaknesses, opportunities and threats. Utilize a SWOT analysis to assess the company, its resources and its environment by examining internal and external influences. Internal influences are the company’s strengths and weaknesses. External influences contain opportunities and threats. A SWOT analysis yields information and direction to transform weaknesses into strengths, emphasize opportunities for improvement and minimize threats.