Describe the respective advantages of the North and South as the Civil War began. What effect did those advantages have on the military strategies of the Union and Confederacy?

First, I'll start with the advantages the North possessed, as they are the ones who won the war.  The North had more capital to buy munitions, buy foodstuffs, and recruit soldiers.  The North was also an internationally recognized government, and it could officially negotiate with other nations, most notably Britain and France.  The North had a larger population thanks to waves of European immigration from Germany and Ireland.  The North also possessed more railroads; ultimately, these would prove the difference in the North's victory.  The North's strategy was based on Winfield Scott's Anaconda Plan, which involved closing down Southern ports and cutting the South in half at the Mississippi River. The North also utilized its increased manpower advantage when Ulysses Grant ended the prisoner exchange in 1864.  
The South had the advantage of fighting on its own home territory.  There was always the hope that Britain and/or France would come to the aid of the Confederacy, but this never materialized as both nations did not want to risk war with the United States and Britain developed cotton production in Egypt.  The South produced better officers and higher quality soldiers early in the war, as more Southerners came from rural backgrounds and were proficient in the use of firearms, but by the end of the war many of these young men were killed or maimed; the quality of the Confederate soldier diminished accordingly.  The South had a long coastline which would take years to fully blockade—the last Confederate port was not closed until February 1865.  The Confederate strategy was to hope for a protracted war which would lead to European intervention and the North losing the will to fight.