What is situation analysis? What is a situation analysis? Considerations within a situation analysis To be effective, situation analysis needs to be thorough. As you evaluate your current product, remember to also include any additional services you provide customers.
Is your customer service top-notch? VRIO analysis can be a great tool for identifying long-term competitive advantage. Distribution situation: How do you get your product to customers? This could be the app store, physical stores, etc. Your distribution mechanism can make or break your business—it is, after all, where you actually reach customers.
Including it in your situation analysis can help you identify ways to better reach, engage, and retain customers. Environmental factors: You might not expect it, but environmental factors can be both internal and external. Internal environmental factors might include poor inter-company communication or changes in leadership and structure.
External environmental factors are often wide-reaching: economic recessions, legal restrictions, etc. Stimulus checks are a timely example of an external environment factor.
To formalize and document this process, you should conduct SWOT analysis with your team. Methods and diagrams for situation analysis Remember how we said that situation analysis is a broad term that includes several smaller, more specific activities? Economic factors: Is there an economic recession or boom?
Did people get stimulus checks recently? Social factors: What lifestyle trends impact your business? What demographic are you trying to reach? Technological factors: Have there been any big tech advances in your industry? Any new legislation regarding your technology? Environmental factors: Are there environmental regulations that impact your industry? These could be emissions standards or something similar.
This one may or may not be relevant, depending on your industry. Legal factors: What health regulations impact the way you conduct business? Safety regulations? Threat of established competitors: No matter how you cut it, rival businesses will always threaten your business.
They are also vying to dominate the market, so you have to be better. This often revolves around an organization's supply chain, including the suppliers, distributors, agencies and partnerships.
Climate—often referred to as context—refers to the areas of a business where it exercises little or no control. Climate changes could impact the industry as a whole rather than just the company. For this reason, any advantages that occur as a result of climate won't typically translate into a competitive advantage.
A SWOT analysis is a method under situation analysis that examines a company's strengths, weaknesses, opportunities and threats, both from a current and future perspective. Ultimately, the goal of a company is to continue building on strengths while reducing weaknesses. A SWOT analysis helps a company prepare for several different scenarios. It's generally a good idea to work with several people to identify the greatest number of ideas for the SWOT matrix, which is why completing a SWOT analysis is much like a brainstorming session.
During the exercise, you analyze the things the business does well, such as your brand attributes, unique selling proposition, strong leadership or great team. For weaknesses, examine the areas in which the business could improve. It could be things like a shortage of people or budgetary limitations. For opportunities, you need to examine whether there is anything that could open you to new markets or demographics.
Finally, for the threats, determine whether any factors could hurt the business, such as changes in laws, emerging competitors or anything else that could impact your company or profits. For the last phase of your situational analysis, you'll use Porter's Five Forces Framework for analyzing your competition and minimizing any potential threats that they could pose to your business.
Ultimately, the goal is to compare and analyze a business's profitability against its direct and indirect competitors. Here are the components of a Five Force analysis:. Start by analyzing the amount of competition that your company faces. Evaluate the number of competitors who are in your industry and how their products and services compare to yours.
Next, evaluate how easy it is to find alternatives to your products and whether there are aspects of your products that customers can do manually or at a lower cost. After examining the threat of substitute products, you need to determine how much power your buyers have. If you're only selling products, the only power they typically have is in the amount they order and whether they customize their products.
If you're selling a service, though, customers may expect you to negotiate. Next, consider the threat of a new business starting in your industry. Identify whether there are any barriers to entry that give your organization an advantage. You probably would not want to open an extreme sports adventure business in a city where the age of the typical resident is older than fifty. Or, you might be wasting your marketing dollars advertising trendy, designer jeans on the Hallmark TV channel.
Besides determining if a customer base exists in the region, this data can be used in the future to plan effective promotional campaigns, forecast inventory needs, and determine the optimal combination of distribution channels. You read about competitive analysis in the previous section at the macro level. At the situational level, a business needs to identify its specific competitors and assess their potential for taking market share. Another industry component that will greatly impact an organization is its suppliers.
Your business may start by buying raw materials and producing finished goods purchased directly by consumers. Some organizations create services rather than goods but still need materials, such as computer software and hardware or office supplies, to provide those services.
Whatever the situation, without raw materials or support products, the organization cannot operate. In the past, it was common for an organization to choose suppliers that were in the same region or at least the same country.
The supply chain is a system comprised of organizations, information, resources, people, technology, and activities that bring products or services from a supplier to a consumer. In larger organizations, entire departments may be dedicated to supply chain logistics. Implementing cooperative alliances with key suppliers is also a popular tactic employed by strategic organizations. Although multiple sources of supply helps to guarantee the availability of supplies, creating a cooperative agreement with one supplier can significantly reduce costs.
How to handle suppliers is an extremely important factor in setting goals and generating strategies. At the situational level, however, state and local regulations also need to be part of any analysis. The regulatory burden depends largely upon the type of industry and the specific nature of the business.
In some industries, regulation is the single biggest uncertainty affecting investment and spending, corporate image, and risk management. These organizations include airlines, utilities, railways, telecommunications, banking, and pharmaceuticals.
Often, the regulations have positive impacts on both consumers and businesses. They provide the public with a high level of confidence in the safety and efficacy of the products. They can also prevent competition from businesses with substandard and low-quality goods from trying to enter an industry. Despite the benefits that regulations can provide, any changes in how the product is manufactured, shipped, tested, or provided will greatly affect unit costs and profit margins.
0コメント