Business Capability Analysis

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The four key components of Strategy Analysis are principles, practices, techniques, and skills. They play an essential role in identifying and validating the organization's strategic needs, defining suitable solution approach(es) and solution(s), and planning, monitoring, and engaging stakeholders to achieve the organization's strategic objectives. Techniques describe a step-by-step approach to conducting Strategic Analysis activities.

Need to assess performance, determine the risk areas, prioritize investments, and set business goals for your company? Here is a Strategy Analysis technique to achieve that. This blog will look at a technique called Business Capability Analysis with examples.

Business Capability Analysis (BCA) is a strategy analysis technique used to identify an organization’s core capabilities or the functions and processes that are most critical to its success. The technique was developed in the early 1990s as a way to help organizations understand their strengths and weaknesses, as well as their competitive advantages. By examining a company’s core capabilities, management can more effectively allocate resources and develop strategies to increase its competitive advantage.

BCA is a detailed assessment of a company’s capabilities that examines each capability's processes, resources, and results. It allows management to identify areas of potential improvement and prioritize investments to achieve desired business outcomes. BCA is often used in combination with other strategic planning tools such as SWOT analysis, Porter’s Five Forces, and Value Chain Analysis.

BCA can be used in many different industries and contexts. For example, it can be applied to identify the capabilities needed for a manufacturing firm to produce a new product or to determine the capabilities necessary for a retail business to expand into new markets. It can also assess a company’s ability to respond to changes in the marketplace or develop new products or services.

Business Capability Analysis has become an integral part of many organizations’ strategic planning processes and is widely used to inform decision-making, resource allocation, and budgeting. BCA can help organizations identify areas of improvement and capitalize on their strengths and opportunities. Companies can develop strategies to gain a competitive edge and maximize their value by understanding their capabilities.


Business Capability Analysis describes what a business is able to do. It involves modeling what a business does or what it needs to do to achieve its objectives and provides a framework for scoping and strategic planning. This can ultimately result in reduced cost, improved customer service, increased turnaround time, etc., for the business.


Capabilities are the abilities of an enterprise to act on or transform something that helps achieve a business goal or objective. Capabilities describe the outcome of performance or transformation, not how it is performed. 

Capability maps provide a graphical view of capabilities. Each capability is found only once on a capability map, even if possessed by multiple business units. Business capability maps help you in planning for multi-year, long-term planning. The maps can show gaps between current and future capabilities, so you can identify areas that need attention.

Capabilities impact value by increasing or protecting revenue, reducing or preventing costs, improving service, or achieving compliance. Capabilities themselves don’t have risks. Instead, risks are due to a lack of performance in capabilities. 

Assess capabilities to identify gaps between expected and actual performance expectations. Use capability gaps to determine what the enterprise needs to do to accomplish its strategy. 

Usage Considerations

Helps maintain competitive advantage, deliver unique value propositions to customers, and develop new products and services.

Advantages of Business Capability Analysis as a strategy analysis technique

Provides a Comprehensive View: Business capability analysis provides a comprehensive view of the organization’s activities, capabilities, and resources. It allows for a clear understanding of the organization's current capabilities and the potential for improvement.

Improves Efficiency: By examining the organization's current capabilities, business capability analysis can help identify areas where improvements can be made. This can lead to more efficient processes and improved resource utilization.

Focuses on Strategic Goals: Business capability analysis helps ensure that the organization focuses on its strategic goals and objectives. It allows for the identification of opportunities for improvement and the development of strategies to achieve these goals.

Facilitates Change Management: Business capability analysis can help an organization to better manage change. It provides visibility into the organization's current capabilities and how they can be improved.

Enhances Decision-Making: Business capability analysis can help to improve decision-making by providing insights into the organization’s current capabilities and potential areas for improvement. It can help to identify opportunities for cost savings and other efficiencies.

Weaknesses of Business Capability Analysis as a strategy analysis technique

1. Time-consuming: Business Capability Analysis can be time-consuming and expensive as it requires a detailed analysis of the company's business capabilities.

2. Too much detail: This technique can provide too much detail, making it difficult to identify the most important issues and opportunities.

3. Resource intensive: Business Capability Analysis requires significant resources to perform, including skilled personnel and technology.

4. Dependency on data: The analysis's accuracy depends on the quality of the data collected and its accuracy.

5. Limitations of scope: This technique is limited in scope, as it only focuses on a single business capability. It does not provide insight into other factors that may affect the company’s performance.

Relationship of Business Capability Analysis with other strategy analysis techniques

Business capability analysis is closely related to other strategic analysis techniques such as SWOT analysis, Porter’s Five Forces, PESTLE analysis, and Value Chain Analysis. These techniques help organizations identify strengths, weaknesses, opportunities, and threats, as well as the potential for competitive advantage. These techniques can inform business capability analysis, as an organization must identify its current capabilities and develop strategies to capitalize on them. Furthermore, understanding the external environment and developing strategies to both capitalize on opportunities and mitigate threats is essential to any successful business capability analysis.

Future of Business Capability Analysis as a strategy analysis technique

Business capability analysis is a strategic analysis technique that will continue to be used in the future as organizations seek to better understand their strengths and weaknesses. This technique helps organizations identify their core capabilities and create plans to deploy and leverage them in order to achieve their desired goals. It can also be used to identify areas of improvement and help organizations to identify opportunities for growth. As companies continue to become more digital and data-driven, the use of business capability analysis as a strategic analysis tool will become even more important in order to ensure that organizations are leveraging their capabilities in the most effective way.

About Adaptive US

This blog is written by Adaptive US. It is among the world’s Most Trusted IIBA Certifications training organizations. We have helped 1500+ students complete IIBA certifications. We are one of the leading IIBA certifications training providers in the last 3 years in a row, 2020, 2021, and 2022. Adaptive US provides success guaranteed CBAP Certificate Training, CCBA Certification Training, ECBA Certification Training, BA Bootcamp, AAC, CBDA, CCA, CPOA online, virtual and on-premise training, question banks, study guides, simulators, flashcards, audio-books, digital learning packs and many more across the globe. For more Information, kindly visit our website:

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