What does situational analysis mean

There are several components in a situational analysis:. Examining how the company is performing by reviewing sales, market share, and customer retention provides a useful snapshot that reveals if the business is fulfilling its goals. It will also help you evaluate competitors and market share. Analyzing current products or services, as well as future product launches, is a vital component of a situation analysis. Market research is needed to determine how viable a new product or service will be.

Examine products and services separately to identify which products best meet your clients' needs and which ones need adjusting. The competitor analysis compares your business to other similar companies. Unmet or underserved needs represent market opportunities. But before a business can successfully target an untapped market, it should understand its strengths and weaknesses.

A strength, weakness, opportunity, threat SWOT analysis is a useful tool to identify how capable your business is of capitalizing on opportunities. Thorough research is critical to understanding your customers.

Once you know your customers well, you can identify other potential customers as your target market and create an effective marketing plan. An analysis of your main competitors will help you determine how your business measures up. Identifying and comparing the competitive advantages of one company to another can help your business adapt to compete more effectively. The SBA provides a list of business statistics you can use in your review. Partnerships and collaborations are a critical part of many business operations.

Analyze collaborations to understand the strength and durability of the partnerships. Reviewing contracts and studying whether products and services were historically delivered as promised can give a company insight on the reliability of these relationships.

A situational analysis should examine the external and internal environment that impact a business's performance. External factors include the economy, competitors, government policies, and regulations. 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. Finally, evaluate the suppliers in your market. The more suppliers that are available to you, the easier it is to find an alternative if you need one at a lower cost. Examine how changing suppliers would impact your products and services. Related: What is Quantitative Analysis?

Find jobs. Company reviews. Find salaries. Upload your resume. Sign in. Career Development. What is a situational analysis? Strengths: Strong points about your brand, products and services and marketing programs Weaknesses: Aspects of your products, brand image and marketing programs that you could improve upon Opportunities: Includes ways you can increase success, such as new ways to reach customers or a new market you could enter Threats: External elements that could negatively impact your sales or profitability.

How to complete a situational analysis. Conduct a 5C analysis. Company Competitors Customers Collaborators Climate. Complete a SWOT analysis. Conduct a Five Forces analysis. Evaluate competitors. Identify whether substitute products are a threat. 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.

Bargaining power of customers: How much does the customer depend on your product? What are your goals and objectives? What are your products? Who is on your team? Competitors: Look at the other businesses in your industry.

What are they doing to capture a share of the market? What are they doing differently than you? Customers: What are the demographics of your customers? Can you expand them? Collaborators: What suppliers and distributors do you depend on? Are there alternative options? Climate: What political, legal, and economic factors are influencing your industry and market? Is it rare? Is it imitable?

Are you organized to use it?