SITUATIONAL ANALYSIS

 

A situational analysis is a set of methods used to thoroughly examine both internal and external factors of any business and their impacts on the company’s performance.”  It is the second and one of the most important steps while preparing a marketing plan. It outlines the company goals, strengths, and weaknesses; describes target customers; identifies important partners and distributors; and provides an analysis of the competitive environment. Correctly written situation analysis can help a company to differentiate a product or service in the marketplace and help in establishing a long-term relationship with customers.

Usually three methods are used for a situational analysis:

a.       5Cs Analysis,

b.      SWOT analysis and

c.       Porter five forces analysis.

d.      Pestle analysis.

5C ANALYSIS:

Company:

Company’s long and short goals, marketing strategies, and capacities are evaluated. In the industry what position the company wants to be at must be defined. Additionally, how effectively business objectives are met and how company’s products are manufactured,
accepted, and consumed is also evaluated.

Successful analysis will help the company to ascertain the extent tot which their business fits the external environment and what improvement is required.

 

Collaborators:

Collaborators such as agencies, suppliers, distributors, and business partners who offer the company plenty of growth opportunities and run business more effectively must be analyzed

They are entities that allow or enhance a company to provide its particular good or service in the way that it does. It primarily revolves around a company’s supply chain that ranges from spot contracts up to quasi-vertical integration. The direction of integration can only be upstream as downstream collaborators are more specifically defined as customers in the 5C Analysis framework.

Customers:

Data about customer demands, shopping channels, motivation to purchase, level of income, and the quantity and frequency of their purchase must be obtained and processed from time to time.

The group of potential customers a company can reach with its products or services can be broken down into three main sizes: Total Available Market, Serviceable Available Market, and the Serviceable Obtainable Market. The market segments may be further segmented through demographics, psychographics, geography, and other distinguishing factors.

 

Competitors:

Competitor analysis is critical in understanding the external environment in which the firm operates. This analysis involves knowing the competitors’ strengths, weaknesses, positioning, market share, and upcoming initiatives.

Climate:

Climate analysis is the evaluation of the macro-environmental factors affecting the business. PESTEL analysis can be used to analyze climate—political, economic, social/cultural, technological, environmental, and legal scenarios are included in PESTEL.

 

 

SWOT ANALYSIS:

Strengths:

Strengths refer to all the elements in the control of the company which have positive contributions to the success of an organization. These elements can be either tangible or intangible.

 

Weakness:

Weaknesses are any factors within the organization that may harm the success of the company. In other words, any factor that restricts the company from achieving desired objectives is a weakness.

 

Opportunities:

Opportunities are outside factors which can have positive effect on or create a path of success for a business.

 

Threats:

Threats are external elements that can hamper the growth of the company. These are the drawbacks and require figuring out suitable ways to deal with.

 

EXAMPLE:

We will see how a marketer can execute situational analysis while designing a marketing plan:

To illustrate how it works, we’ll create our own SWOT analysis example: a family-owned restaurant, with a single location, operating in an urban area.

PESTEL ANALYSIS

Environmental analysis is a strategic process to identify all the external and internal elements, which can affect the organization’s performance.

The most used method of environmental analysis is the PESTLE analysis. It offers a bird’s eye view of the business conduct. It helps managers to assess where the company stands in the market and also helps foresee where the organization will be in the future.

PESTLE analysis consists of various factors that affect the business environment in every industry directly or indirectly.

 

Political factors:

A country’s current political situation and global political condition affect business. It explains how a country’s political factors affect business decision making. E.g. Government stability, government policies, tax laws, ease of doing business etc.

 

Economic factors:

Economic factors involve all the elements of the economy and its state. Economic factors help to set up strategies keeping changes in mind. E.g. Inflation rate, lending rate, credit accessibility, monetary policies, foreign exchange rates etc.

Social factors:

Every country has a distinctive social mindset. These attitudes have a deep impact on how businesses perform. Some social factors even affect the final sales of products and services. E.g. Culture, lifestyle, literacy, demographics, wealth distribution.

 

Technological factors:

Continuous technological advancement is greatly influencing businesses. Analysing and reacting to these changes is a must for companies to survive in the market. Technological factors also enable companies to understand how customers react to the changes in the market. E.g. New scientific discoveries, innovative technological platforms, technological advances, obsolescence of technology etc.

 

Legal factors:

Continuous changes in legislation affect the business. Companies should analyse and anticipate legal developments in respective business environments. E.g. Product regulations, employment regulations, competition regulations, health and safety legislations etc.

 

Environmental factors:

Various environmental factors like geographical location and climate influence business performance. How people react to these environmental factors also has an impact on business.