Conducting a Strategic Audit

The purpose of an audit is to assess an organization’s strategy. Diverse information is typically obtained from library research, field work, or direct interviews – and increasingly the Internet. There are typically eight dimensions in formulating a unified, comprehensive, and integrated set of decisions from a top-management perspective that attains organization purpose.

Step 1: Situation Assessment

What is our purpose? What is our "strategic intent"?
How do we rank in our business and why?
What is our fiscal condition and why?
What is the relationship between the business strategy, organization environment, and overall performance?
What is our sustainable competitive advantage? What core competencies do we possess?
What are our strengths? Do we use these fully?
What are our weaknesses? How can we solve or mitigate these?
What are our opportunities? How can we exploit these?
What are the threats to us? What can we do about them?

Step 2: Strategic Managers

What is our collective strategic vision?
Do the executives possess the right leadership skills and abilities?
Are the top managers entrepreneurial and creative?
Are they willing to take risks?
Are they analytical?
Do they possess necessary organization talents?
Do they possess necessary interpersonal skills?
Are they willing to change?
What are their values? What is our social responsibilities and business ethics?

Step 3: Environmental Scanning

How do we evaluate the scope of our operations and primary competitors?
What industry forces work for and against us? What strategic group are we in, and what are the mobility barriers?
Whom do we serve and who has a stake in our actions? What are their needs and requirements?
What major products and services do we provide these stakeholders?
How do we provide these products and services?
How can we improve these products and services?
Based on the above, do you think stakeholder support will remain about the same?
Based on the above, what is the scenario for the future?

Step 4: Strategy Evaluation

What business(es) should we be in to add shareholder value? What is our generic business strategy? How about our international strategy?
How do you evaluate this current strategy?
What really makes the difference between success and failure in our business? What are the industry key success factors?
Is the strategy consistent with the foregoing analysis?
Is the strategy consistent with desired risk, available resources, and timing?

Step 5: Administrative Considerations

What is the role of headquarters? How are we creating a "learning organization"?
How are our value-creating activities organized? How should we measure and re-organize these processes?
What kind of structure characterizes our organization?
In what ways and in what directions do our systems focus people’s attention and energy?
What are the guiding concepts or fundamental ideas around which we have built our organization?
What are the basic management characteristics in this organization?
Describe our approach to human resource management.
To what extent do the above structure, systems, and processes uniquely reinforce and support our strategy?
Can we change and transform the organization?

Step 6: Action Planning

Which activities will enhance our organization’s performance?
What are the planning premises?
What are the expected fiscal results?
What are the feasible alternatives to these activities?

Step 7: Implementation

What resources will this action plan require from finance, human resources, marketing, operations, and other functional areas and departments?
What changes will have to occur for us to be successful in 2 to 5 years?
Are there other organizations or individuals we might collaborate with?
What training is necessary?

Step 8: Performance Evaluation and Control

When and how will we evaluate performance?
What are the desired quantitative and qualitative measurements of success?
Will this strategy justify the needed time and resources?
Can we afford it?
Realistically, can we implement this action plan?
Have we included all supporting programs?
Can we clearly establish accountability?

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