Situation analysis

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In strategic management, situation analysis (or situational analysis) refers to a collection of methods that managers use to analyze an organization's internal and external environment to understand the organization's capabilities, customers, and business environment. [1] The situation analysis can include several methods of analysis such as the 5C analysis, SWOT analysis and Porter's five forces analysis. [2]

Contents

In marketing

In marketing, a marketing plan is created to guide businesses on how to communicate the benefits of their products to the needs of potential customer. The situation analysis is the second step in the marketing plan and is a critical step in establishing a long term relationship with customers. [3]

The parts of a marketing plan are:

The situation analysis looks at both the macro-environmental factors that affect many firms within the environment and the micro-environmental factors that specifically affect the firm. The purpose of the situation analysis is to indicate to a company about the organizational and product position, as well as the overall survival of the business, within the environment. Companies must be able to summarize opportunities and problems within the environment so they can understand their capabilities within the market. [4]

5C analysis

While a situation analysis is often referred to as the "3C analysis", the extension to the 5C analysis has allowed businesses to gain more information on the internal, macro-environmental and micro-environmental factors within the environment. The 5C analysis is considered the most useful and common way to analyze the market environment, because of the extensive information it provides. [5]

Company

The company analysis involves evaluation of the company's objectives, strategy, and capabilities. These indicate to an organization the strength of the business model, whether there are areas for improvement, and how well an organization fits the external environment. [6]

Competitors

The competitor analysis takes into consideration the competitors position within the industry and the potential threat it may pose to other businesses. The main purpose of the competitor analysis is for businesses to analyze a competitor's current and potential nature and capabilities so they can prepare against competition. The competitor analysis looks at the following criteria:

Customers

Customer analysis can be vast and complicated. Some of the important areas that a company analyzes includes: [5]

Collaborators

Collaborators are useful for businesses as they allow for an increase in the creation of ideas, as well as an increase in the likelihood of gaining more business opportunities. [7] The following type of collaborators are:

Businesses must be able to identify whether the collaborator has the capabilities needed to help run the business as well as an analysis on the level of commitment needed for a collaborator-business relationship. [6]

Climate

To fully understand the business climate and environment, many factors that can affect the business must be researched and understood. An analysis on the climate is also known as PEST analysis. The types of climate/environment firms have to analyse are:

SWOT

A SWOT analysis is another method of situation analysis that examines the strengths and weaknesses of a company (internal environment) as well as the opportunities and threats within the market (external environment). A SWOT analysis looks at both current and future situations. The goal is to build on strengths as much as possible while reducing weaknesses. This analysis helps a company come up with a plan that keeps it prepared for a number of potential scenarios, as part of corporate planning or strategic planning

Porter's five forces industry analysis

Porter's model involves scanning the environment for threats from competitors and identifying problems early on to minimize threats imposed by competitors. This model can apply for any type of business, from small to larger sized businesses. Porter's model is not just for businesses, but can also be applied to a country to help gain insight into creating a competitive advantage in the global market. [12] The ultimate purpose of Porter's five forces model is to help businesses compare and analyze their profitability and position with the industry against indirect and direct competition.

Related Research Articles

<span class="mw-page-title-main">Marketing</span> Study and process of exploring, creating, and delivering value to customers

Marketing is the act of satisfying and retaining customers. It is one of the primary components of business management and commerce.

In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning.

A marketing plan is a strategy or outline created to accomplish a marketing team's objectives. A marketing plan is often created together by marketing managers, product marketing managers, product managers, and sales teams. A marketing plan falls under the umbrella of the overall business plan.

Marketing management is the strategic organizational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organizations and on the management of a firm's marketing resources and activities.

Competitive analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities and threats. Profiling combines all of the relevant sources of competitor analysis into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment.

<span class="mw-page-title-main">Porter's five forces analysis</span> Framework to analyse level of competition within an industry

Porter's Five Forces Framework is a method of analysing the operating environment of a competition of a business. It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness of an industry in terms of its profitability. An "unattractive" industry is one in which the effect of these five forces reduces overall profitability. The most unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit levels. The five-forces perspective is associated with its originator, Michael E. Porter of Harvard University. This framework was first published in Harvard Business Review in 1979.

<span class="mw-page-title-main">SWOT analysis</span> Business planning and analysis technique

SWOT analysis is a strategic planning and strategic management technique used to help a person or organization identify Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning. It is sometimes called situational assessment or situational analysis. Additional acronyms using the same components include TOWS and WOTS-UP.

Porter's generic strategies describe how a company pursues competitive advantage across its chosen market scope. There are three/four generic strategies, either lower cost, differentiated, or focus. A company chooses to pursue one of two types of competitive advantage, either via lower costs than its competition or by differentiating itself along dimensions valued by customers to command a higher price. A company also chooses one of two types of scope, either focus or industry-wide, offering its product across many market segments. The generic strategy reflects the choices made regarding both the type of competitive advantage and the scope. The concept was described by Michael Porter in 1980.

Marketing strategy is an organization's promotional efforts to allocate its resources across a wide range of platforms and channels to increase its sales and achieve sustainable competitive advantage within its corresponding market.

Competitive intelligence (CI) is the process and forward-looking practices used in producing knowledge about the competitive environment to improve organizational performance.

Marketing intelligence (MI) is the everyday information relevant to a company's markets, gathered and analyzed specifically for the purpose of accurate and confident decision-making in determining market opportunity, market penetration strategy, and market development metrics. Marketing intelligence is necessary when entering a foreign market.

Context analysis is a method to analyze the environment in which a business operates. Environmental scanning mainly focuses on the macro environment of a business. But context analysis considers the entire environment of a business, its internal and external environment. This is an important aspect of business planning. One kind of context analysis, called SWOT analysis, allows the business to gain an insight into their strengths and weaknesses and also the opportunities and threats posed by the market within which they operate. The main goal of a context analysis, SWOT or otherwise, is to analyze the environment in order to develop a strategic plan of action for the business.

The six forces model is an analysis model used to give a holistic assessment of any given industry and identify the structural underlining drivers of profitability and competition. The model is an extension of the Porter's five forces model proposed by Michael Porter in his 1979 article published in the Harvard Business Review "How Competitive Forces Shape Strategy". The sixth force was proposed in the mid-1990s. The model provides a framework of six key forces that should be considered when defining corporate strategy to determine the overall attractiveness of an industry.

A market analysis studies the attractiveness and the dynamics of a special market within a special industry. It is part of the industry analysis and thus in turn of the global environmental analysis. Through all of these analyses the strengths, weaknesses, opportunities and threats (SWOT) of a company can be identified. Finally, with the help of a SWOT analysis, adequate business strategies of a company will be defined. The market analysis is also known as a documented investigation of a market that is used to inform a firm's planning activities, particularly around decisions of inventory, purchase, work force expansion/contraction, facility expansion, purchases of capital equipment, promotional activities, and many other aspects of a company.

The following outline is provided as an overview of and topical guide to marketing:

The 3Cs Model is an industry model, which offers a strategic look at the factors needed for success. It was developed by Japanese organizational theorist Kenichi Ohmae.

In marketing, a company’s value proposition is the full mix of benefits or economic value which it promises to deliver to the current and future customers who will buy their products and/or services. It is part of a company's overall marketing strategy which differentiates its brand and fully positions it in the market. A value proposition can apply to an entire organization, parts thereof, customer accounts, or products and services.

Market environment and business environment are marketing terms that refer to factors and forces that affect a firm's ability to build and maintain successful customer relationships. The business environment has been defined as "the totality of physical and social factors that are taken directly into consideration in the decision-making behaviour of individuals in the organisation."

Sometimes referred as Advertising Exposure, Marketing Exposure is the degree to which a company’s target market is exposed to the company’s communications about its product/ services, initiatives, etc. Exposure is the product of a marketing strategy, and once the strategy is implemented it is only a matter of time before exposure is put into action. Consumers recognize "marketing exposure" when the company creates and promotes a campaign. There are three types of marketing exposure: intensive, selective, and exclusive.

Product strategy defines the high-level plan for developing and marketing a product, how the product supports the business strategy and goals, and is brought to life through product roadmaps. A product strategy describes a vision of the future with this product, the ideal customer profile and market to serve, go-to-market and positioning (marketing), thematic areas of investment, and measures of success. A product strategy sets the direction for new product development. Companies utilize the product strategy in strategic planning and marketing to set the direction of the company's activities. The product strategy is composed of a variety of sequential processes in order for the vision to be effectively achieved. The strategy must be clear in terms of the target customer and market of the product in order to plan the roadmap needed to achieve strategic goals and give customers better value.

References

  1. ↑ "Dictionary of marketing terms". American Marketing Association. Archived from the original on 28 May 2008. Retrieved 14 January 2008.
  2. ↑ Steenburgh, Thomas; Avery, Jill. "Marketing Analysis Toolkit: Situation Analysis". Harvard Business Review . Retrieved 4 February 2010.
  3. ↑ "Create your marketing strategy". Business Link. Archived from the original on 15 October 2012. Retrieved 22 March 2012.
  4. ↑ "The marketing process". NetMBA Business Knowledge Centre. Retrieved 22 March 2012.
  5. 1 2 3 4 5 "Situation Analysis". NetMBA Business Knowledge Centre. Retrieved 22 March 2012.
  6. 1 2 3 Anderson, Gene (March 2005). "Framework for marketing planning". University of Michigan Business School .
  7. ↑ Verganti, Roberto. "Quantity vs. Quality in Collaborations". Harvard Business Review . Retrieved June 15, 2011.
  8. ↑ "What is an employment agency or temp agency?". settlement.org. Ontario Council of Agencies Serving Immigrants. Retrieved March 26, 2012.
  9. ↑ Jordan, Peter. "Distribution 25: Supply-Chain Advantages". CRN. Archived from the original on 21 August 2012. Retrieved June 22, 2001.
  10. ↑ "Partnership". The Government of Western Australia – Small Business Development Corporation. Archived from the original on 8 July 2012. Retrieved 22 March 2012.
  11. ↑ "PEST Analysis". NetMBA Business Knowledge Centre. Retrieved March 28, 2012.
  12. ↑ Porter, Michael. "The Five Competitive Forces That Shape Strategy". Harvard Business Review . Retrieved March 28, 2012.
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