Strategic Analysis and Evaluation of the Business Environment
This domain tests how quickly and selectively you can read the external context of a case and convert it into implications for a board decision. Marks sit with evaluation - the "so what" - far more than with framework recall. A candidate who lists twelve PESTEL factors and draws no conclusion scores below one who uses three factors to change the recommendation.
Choosing the framework that fits the question
- PESTEL for macro drivers that move the whole sector: Bank of Ghana policy rate and inflation, cedi volatility and FX access, energy reliability and tariffs, tax changes, AfCFTA market access, SEC/GSE regulation.
- Five Forces for industry profitability. In Ghanaian and wider West African cases, add complementors and treat informal competitors, distribution reach and import dependence as forces in their own right.
- Strategic group maps and competitor capability analysis when the question is "can we actually win this segment?"
- Stakeholder mapping (power versus interest) when the decision needs consent: regulators, lenders, unions, family shareholders, host communities.
From analysis to judgement
Derive key success factors from the environment first, then test the entity's resources against them: does it have them, can it buy them, how long would that take? Quantify wherever the case supplies numbers, and state the direction and rough magnitude of the effect on margin, cash or risk. Separate evidence in the case from your own assumptions, and name the gaps explicitly rather than filling them silently.
Worked example
A Ghanaian bottler is weighing entry into sachet water. Three incumbents hold about 60% of regional volume - concentrated, but the product is near-homogeneous, so rivalry shows up as price. Buyers are thousands of small retailers with no bargaining power. The binding force is imported resin at 30% of unit cost: a 25% cedi depreciation lifts unit cost by roughly 7.5% (0.30 × 25%), and because cost is about 88% of price, that absorbs over half of a 12% net margin. Conclusion: entry is defensible only with local resin sourcing or FX hedging; the proposed GHS 40m plant, with neither, is not justified.
Traps that cost marks
- Framework dumping: full PESTEL and full Five Forces with no ranking and no conclusion.
- Treating a macro factor as an industry factor, or vice versa.
- Ignoring the case's own figures in favour of generic commentary.
- Ending with "the environment is challenging" - no direction, no magnitude, no decision.
- Overlooking a regulator or licence that removes the option entirely.