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How to Make a Situation Analysis

How to make a situation analysis.

Before making any marketing strategy, whether advertising or public relations, you need to learn how to make a situation analysis. Your analysis will become the very foundation of the strategies and tactics you will implement. This will show you exactly what problems you need to address and what situations you need to take advantage of.

There are plenty of models that you can use to make a situation analysis. However, the most extensive and widely used templates are 5C analysis and SWOT analysis.  Let’s examine how to use each of these templates to make your situation analysis.


5C Analysis


The 5C Analysis is one of the most useful models for a situation analysis simply because of the breadth and depth it provides. By analyzing each of the parts of this template, you will be able to identify where your company currently stands, your competitive advantage, and market opportunities that you can tap.

Company

First of all, determine where your business is now and how you positioned it in the market. Divide your business into your core products (the primary products you provide in the market) and the support products (those that enhance your core products). Other aspects you may want to look at include brand identity, pricing, distribution, and store location, among others.

Doing these should help you understand the objectives you need to achieve and maintain for your business, as well as measure their performance.

Competitors

After determining your market position, compile a list of your competitors and break them down according to level. Primary competitors consist of businesses that you feel share the same goals, strategies, and resources as your company. Secondary competitors are those that indirectly affect your sales. Also come up with businesses that may pose as a potential threat to your company in the future.

Competitors are important in analyzing the environment.

Once you’ve compiled your competitor list, come up with the advantages and disadvantages for each by figuring out where they are in the market, how the market perceives them, and how they compare to your business.

Customers

Next, define your target market according to primary and secondary levels. Your market can be categorized according to their purchasing trends, power, and behavior. You also have to consider how your products and services measure up to their expectations and satisfy consumer needs. Furthermore, figure out how your market perceives not only your product in terms of what it has to offer, but also your business as a brand in relation to your competitors.

Collaborators

Collaborators refer to those that help run your business. These are your suppliers that provide your raw materials to build your products. These are your manufacturers, importers and exporters. Distributors who hold your inventory are also part of this category. Finally, business partners who share assets or liabilities are included here. Define the extent of your relationship with these collaborators, especially the level of commitment that you need.

Climate

Finally, you should determine other factors that affect your business. They consist of two aspects – external and internal.

External could be natural phenomenon, economic situation, politics, culture and diversities that will or might affect your performance in the market.

Internal refers to company politics, your workforce, production rate, manufacturing processes, business partnerships, tie-ups, administration and management expertise.


SWOT Analysis


After analyzing the 5 Cs of your business, the next step is to cross examine each point and analyze how they are interrelated. By carefully studying each point, you will be able to derive the S-W-O-T of your business. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

Image of SWOT Analysis Model

• Strengths

These are the positive attributes, material and conceptual, internal to your brand. Such features are within your capacity to control. You could break this down into product/service, organization and administration, assets and valuable materials, and other features that may give you a competitive advantage in the market.

• Weaknesses

These are factors within your control that diminish your ability to gain or maintain a competitive advantage in the market. You can also categorize these into tangible and intangible. Under tangible, these could be poor packaging, inferior location, limited resources etc. Intangible weaknesses could be lack of expertise, lack of special skills and trainings, inferior ambiance in your store etc. These are all internal factors that render your business at a disadvantage in comparison to your competitor.

• Opportunities

These are external factors that may give you an edge in the market. They may also be current situations that you may find yourself tempted to take advantage of. Opportunities show the potential you can realize by the execution of your marketing strategies. Examples of these are economic situations advantageous for your business, lifestyle and trend changes, positive perception of the market with regard to your brand, and a more.

• Threats

These are external factors that are outside your realm of control, that may negatively affect your business. Threats are the reasons why contingency plans are usually developed. These can be situations such as decline of economic value of your stocks, inevitable price increase from suppliers, governmental regulations, a change in consumer behavior that reduces profit, etc.

Implications

After listing and cross-examining all of these factors, you can now determine the implications of your analysis. Having defined your internal strengths and weaknesses and figured out external opportunities and threats, how are you going to take advantage of your strengths to overshadow or improve on your weaknesses? How will you wield them to seize opportunities and deflect threats in the case that they do materialize?

Here is an example of a SWOT Analysis of the print industry in the US. If you plan on starting a business on printing services, here’s a SWOT made ready for you. All you need to do is fill in the necessary information.

If you have additional information, reactions, insight or you just want to share an experience about making a situational analysis, please write a comment below.

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1 Comment on "How to Make a Situation Analysis"

  1. Hi Nick! Interesting query you have here. I scanned through the article and I think the work-flow makes sense. However, I'd like to raise 2 points:

    1.) The 7S' of McKinsey covers a much larger scope. Moreover it is designed to asses and carefully follow changes that take place internally. Hence, this strategic model is designed to deal with internal issues. As I continued reading the post, I noticed that some elements have been changed from the original model but in essence still focuses on solving internal issues. – Organizational/Team Management Strategy.
    2.) On the other hand, a situational analysis is focused more in devising a plan to solve external issues. Notice that most questions and research that you need would follow on how your brand and your competition is doing in the market, your market's (human) activity and perception, and natural, economical, and political issues that might affect your business. – Executive Marketing Strategy

    Based on these assessments, I have come to a conclusion that the two strategies are very different. The 1st strategy is a management model and the 2nd strategy is a marketing tool. Thus, I'd have to say YES. I think these two strategies can be used together in any business. Apply 7S' in managing meetings, brainstorms, or any organizational issues and activities while utilizing the full potential of making a situational analysis when dealing with external issues and for marketing.

    I hope I was able to give you a satisfactory answer. Please feel free to ask me for clarifications if there should be any. Thanks for that wonderful question Nick.

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