This essay aims to examine and evaluate the comparative advantages of the environment and the strategic capability approaches that are used to analyse an organisations strategic position. “Strategic position is concerned with the impact on strategy of the external environment, the organisations strategic capability, the organisations goals and the organisations culture.” (Johnson et al, 2012).

The business environment can best be described as an onion with three layers surrounding the organisation. The layers provide a framework to analyse the relentlessly shifting, intricate environments within which businesses operate. The outer layer consists of the macro-environment. These major external and uncontrollable factors influence an organisations decision-making process as they affect the environment as a whole. Organisations perform a PESTEL analysis to assess the political, economical, social, technological, environmental, and legal aspects of the environment. The data derived from the environment is used to identify the ‘key drivers of change’ that may influence strategic decisions in the future. The next layer looks at industry. Porters’ Five Forces Framework assesses the attractiveness and potential profitability of the industry, as well as the possible threats. The inner layer comprises of competitors and markets. At this point, it may be useful to disaggregate. Here, strategic groups are used to identify key competitors and the company evaluates the needs and wants of its consumers through marketing concepts such as segmentation. Strategic groups and segmentation allow the company to develop effective positioning strategies within the industry. Collectively, these frameworks provide the organisation with valuable information depicting opportunities or unforeseen threats in the business environment. Although the data derived aids the organisation in the