SITUATIONAL ANALYSIS: WHAT IT IS, HOW TO DO IT AND AN EXAMPLE - DUDAS - 2025

The situational analysis refers to a collection of methods that managers use to analyze the internal and external environment of an organization to understand the capabilities, customers and the business environment of the company.

It does not matter if you plan to introduce a new product to the market, or if you need to find out what the strengths and weaknesses of the company are, an analysis of micro and macro environmental factors can indicate the strategies to be followed. This is the purpose of the situational analysis.

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Situational analysis is a critical step in establishing a long-term relationship with clients. In corporate life, situational analysis helps define what the current situation is and what the actions should be to keep moving forward.

The rapidly changing environment and people's lifestyles require regular analysis to provide a snapshot of the company's position in the business environment, as well as to present development opportunities and enhance its growth.

What does it consist of?

Situation analysis analyzes both macroenvironment factors, which affect many companies, and microenvironment factors, which specifically affect a company.

The purpose is to tell a company about its organizational and product position, as well as the overall survival of the company within the environment. It also means forecasting the results if a decision is made in either direction.

It is important to conduct a situational analysis before developing any marketing strategy.

Importance

It is a fundamental component of any business plan and must be periodically verified to ensure that it is kept up to date.

A situational analysis delimits both the external and internal factors of a company, identifying its business environment, its capabilities, current and potential customers, and the impact they can cause on the organization.

It helps to identify strengths, opportunities, weaknesses and threats for the organization. It is a very complex type of analysis and, in general, every business plan will include the concept of situational analysis.

Interpretation of the data

Although the concept has clear advantages for identifying the current position in the market, as well as the opportunities to develop, the situation analysis can also have disadvantages, which consist mainly of the misinterpretation of the collected data.

While some of the components of the concept involve quantifiable data, other parts are represented only by qualitative data.

Therefore, the interpretation can take different forms. To avoid this and obtain the clearest possible photograph, the observations of all the departments of the company and the collaboration between them should be taken into account.

How is it done?

Situational analysis consists of several methods: 5C analysis, SWOT analysis, and Porter's five forces analysis.

-5C analysis

It is considered the most useful and common way to analyze the market environment, due to the extensive information it provides.

Company

It involves the evaluation of the objectives, strategies and capacities of the company. This indicates the strength of the business model, whether there are areas for improvement, and how well an organization adapts to the external environment.

It is made up of an analysis of the company's mission and the goals established to achieve that mission.

Competitors

Competitor analysis takes into consideration the position of the competition within the industry, as well as its potential threat to the company.

The main objective is for the company to analyze the current and potential capabilities of the competition in order to prepare.

The company must be able to identify competitors within its industry. Direct and indirect competitors, as well as potential competitors, must be identified.

customers

Customer analysis can be vast and complicated. Some of the important areas analyzed are:

- Demographics.

- Market size and potential growth.

- What the client wants and needs.

- Motivation to buy the product.

- Distribution channels.

- Quantity and frequency of purchase.

- Customer income level.

Collaborators

Collaborators are useful for companies, as they allow to increase the creation of ideas, as well as increase the probability of obtaining more business opportunities.

Agencies are the intermediaries of business. Suppliers provide the raw materials required to manufacture the products. Distributors help manage relationships with manufacturers, as well as manage relationships with suppliers.

Context

To better understand the business environment, many factors that can affect the business must be investigated. An analysis on context is also known as a PEST analysis.

An analysis of the political and regulatory context, the economic context, the socio-cultural context, and the technological one must be carried out.

-SWOT analysis

Examine current and future situations, analyzing current strengths and weaknesses, while looking for future opportunities and threats.

The goal is to develop the strengths and reduce the weaknesses as much as possible. A future threat can be a potential weakness, while a future opportunity can be a potential strength.

-Analysis of the five forces of Porter

It involves scanning the environment for threats from competitors and identifying issues to minimize these threats imposed by competitors.

The ultimate purpose of Porter's Five Forces Model is to help companies compare and analyze their profitability and position in the industry against direct and indirect competition.

Example

These are the valuable elements to consider when writing a situational analysis.

Product situation

The key question is: what is my current product? This definition can be divided into segments, such as the main product and any other secondary product that is also part of what is sold.

It is important that this is observed according to the different parties, so that it can be related to the main needs of the customers. Also discuss what customer need the product is meeting.

Competitive situation

Analyze who the main competitors are: how they compare, what they are doing, analyze their benefits and characteristics. What are your competitive advantages?

Environmental factors

What internal and external environmental factors are there that should be considered? This could include both sociological and economic factors that affect performance.

Distribution situation

Review the distribution situation: how is the product being brought to market? Do you need it to go through distributors or other consignees?

Analysis of opportunities and threats

This requires conducting a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats).

The opportunities that are available in the market, the important threats that the company faces, as well as those that can be faced in the future, the strengths that the company can rely on, and any weaknesses that may affect its performance should be written down.

References

1. Wikipedia, the free encyclopedia (2018). Situation analysis. Taken from: en.wikipedia.org.
2. The Balance Small Business (2018). Situational Analysis. Taken from: thebalancesmb.com.
3. Hitesh Bhasin (2018). Situation Analysis. Marketing91. Taken from: marketing91.com.
4. Mageplaza (2018). A Situational Analysis of a Strategic Marketing Plan. Taken from: mageplaza.com.
5. Kristie Lorette (2018). A Situational Analysis of a Strategic Marketing Plan. Small Business - Chron. Taken from: smallbusiness.chron.com.