what is situation analysis and its different methods?


Do you feel that the very established businesses, which are successful just, wing it and hope for the best? Well, if that is the case, then every start-up and every business will be successful without any impediments.

In the real sense, these businesses are proactively evaluating the landscape of their industry, their competitors, and the internal assets that they possess. To take their businesses to the next level, executives, team leaders, project managers, and other members of the team practice strategic leadership to perform situation analysis.

Now, you will wonder what is situation analysis? How it will help or affect the business?

Situational analysis allows the company to take a look at the company’s internal strengths and weaknesses along with the simultaneous identification of broader trends happening among the competitions and customers.

Believe it or not, situation analysis is the invaluable step zero that smart teams consider and run it before making any grand plans.

In this article, we will study A to Z of situational analysis and cover the most popular methods penning down the benefits of each and giving you the most important tips for carrying out the same.

So, stay tuned…

What is situational analysis?

Situational analysis is the method to identify a company’s internal strengths and deficiencies by evaluating the internal and external factors of a business. It identifies both the challenges that a business is likely to face and advantages that a business is likely to enjoy.

The purpose or the ultimate goal of a situational analysis is to determine the company’s strengths, weaknesses, potential new customers, and lingering issues that will contribute to the business general standing. There are multiple methods for evaluating the situational analysis. Often, these methods are used in conjunction with one another to give better results.

Usually, it is advised to have situational analysis before starting a project or embracing new marketing strategies. It has some common factors that include:

  • Competition
  • Product
  • Distribution
  • Customers
  • Market environment

The purpose of conducting a situational analysis is to show the business a better understanding of different factors affecting the company’s success. The results will show the business an insight of how and when to move forward.

Importance of situational analysis

Situational analysis is important because there is no way of running an organization blindly without grasping the scope of mitigating factors that impact the outcome of a company.

Situational analysis describes the work environment of a business and praises for what it does well and where it needs more improvement and how to grow more revenues with customer satisfaction and maximum marketing.

Methods used in situational analysis

Different methods are used for situational analysis. Companies use one or more than one method to outline their overall performance and decide what actions are needed next. It is best to use two methods in conjunction to evaluate the complete company’s status.

Some of the popular methods are:

  • SWOT Analysis
  • 5C’s Analysis
  • Porter five forces
  • PESTLE Analysis

Qualities of situational analysis results

Without any benefits or desired results, one will not believe in performing the situational analysis. The qualities of situational analysis results include:

  • Easily understandable: The situational analysis of a company should be easily understandable and known by a person who is not working in your company. It should have a simple planning understandable by a layman.

  • Practical: The main reason for conducting situational analysis is to have gathering of useful data that will help formulating the practical marketing strategies. If the results or goals are impractical, the whole process of conducting the situational analysis is a total waste.

  • Attention to both internal and external factors equally: A company is never solely affected by internal or external factors. It is affected by the combination of both. Situational analysis provides useful insights to both the internal and external factors of a business.

  • Inspires complete company analysis: Situational analysis provides complete information about the business current market position. It provides improvement for the future analysis. If we carry out the practical analysis, it always ends up with an inspiration for more in the later stages.

  • Goal-oriented: Situational analysis not only states the business current position but also sets the intentions for expansion. The successful situational analysis formulates the business goals for the future because without any goals the business remains stagnant.

  • Outlines the plans for the goals: Situational analysis also outlines the plans for the goals along with the feature of setting goals. It also determines how these features will be accomplished. The plans are not to be set in stone, there should be extensive research and back up the intention of reaching goals with the help of situational analysis.

Wrapping up

In this blog we have understood about the basics of situational analysis. In the next article, we will be learning about its two important methods which is SWOT Analysis and 5Cs Analysis.

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