strategic management In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of Resource management, resources ...

, situation analysis (or situational analysis) refers to a collection of methods that

managers Management (or managing) is the administration of organizations, whether businesses, nonprofit organizations, or a government bodies through business administration, nonprofit management, or the political science sub-field of public administr ...

use to analyze an organization's internal and external environment to understand the organization's capabilities, customers, and business environment. The situation analysis can include several methods of analysis such as the 5C analysis,

SWOT analysis In strategic planning and strategic management, SWOT analysis (also known as the SWOT matrix, TOWS, WOTS, , and Situation analysis, situational analysis) is a decision-making technique that identifies the strengths, weaknesses, opportunities, ...

and

Porter's five forces analysis Porter's Five Forces Framework is a method of analysing the competitive environment of a business. It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractive ...

In marketing

In marketing, a

marketing plan A marketing plan is a plan created to accomplish specific marketing objectives, outlining a company's advertising and marketing efforts for a given period, describing the current marketing position of a business, and discussing the target market a ...

is created to guide businesses on how to communicate the benefits of their products to the needs of potential customer. The situation analysis is the second step in the marketing plan and is a critical step in establishing a long term relationship with customers. The parts of a marketing plan are: * Introduction * Situation analysis * Objectives *

Budgeting A budget is a calculation plan, usually but not always financial plan, financial, for a defined accounting period, period, often one year or a month. A budget may include anticipated sales volumes and revenues, resource quantities including tim ...

Strategy Strategy (from Greek στρατηγία ''stratēgia'', "troop leadership; office of general, command, generalship") is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty. In the sense of the " a ...

Execution Capital punishment, also known as the death penalty and formerly called judicial homicide, is the state-sanctioned killing of a person as punishment for actual or supposed misconduct. The sentence ordering that an offender be punished in ...

Evaluation In common usage, evaluation is a systematic determination and assessment of a subject's merit, worth and significance, using criteria governed by a set of Standardization, standards. It can assist an organization, program, design, project or any o ...

The situation analysis looks at both the macro-environmental factors that affect many firms within the environment and the micro-environmental factors that specifically affect the firm. The purpose of the situation analysis is to indicate to a company about the organizational and product position, as well as the overall survival of the business, within the environment. Companies must be able to summarize opportunities and problems within the environment so they can understand their capabilities within the market.

5C analysis

While a situation analysis is often referred to as the " 3C analysis", the extension to the 5C analysis has allowed businesses to gain more information on internal and external factors to aid in strategic decision-making. The 5C analysis is considered the most useful and common way to analyze the market environment, because of the extensive information it provides.

Company

The company analysis involves evaluation of the company's objectives, strategy, and capabilities. These indicate to an organization the strength of the

business model A business model describes how a Company, business organization creates, delivers, and captures value creation, value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-pub ...

, whether there are areas for improvement, and how well an organization fits the external environment. * Goals and objectives: An analysis on the mission of the business, the industry of the business and the stated goals required to achieve the mission. * Position: An analysis on the

marketing strategy Marketing strategy refers to efforts undertaken by an Organizational structure, organization to increase its sales and achieve competitive advantage. In other words, it is the method of advertising a company's products to the public through an est ...

and the

marketing mix The marketing mix is the set of controllable elements or variables that a company uses to influence and meet the needs of its target customers in the most effective and efficient way possible. These variables are often grouped into four key ...

. * Performance: An analysis on how effective the business is achieving their stated mission and goals. * Product line: An analysis on the products manufactured by the business and how successful it is in the market.

Competitors

The

competitor analysis Competitive analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities a ...

takes into consideration the competitors position within the industry and the potential threat it may pose to other businesses. The main purpose of the competitor analysis is for businesses to analyze a competitor's current and potential nature and capabilities so they can prepare against competition. The competitor analysis looks at the following criteria: *Identify competitors: Businesses must be able to identify competitors within their industry. Identifying whether competitors provide the same services or products to the same customer base is useful in gaining knowledge of direct competitors. Both direct and indirect competitors must be identified, as well as potential future competitors. *Assessment of competitors: The competitor analysis looks at competitor goals, mission, strategies and resources. This supports a thorough comparison of goals and strategies of competitors and the organization. *Predict future initiatives of competitors: An early insight into the potential activity of a competitor helps a company prepare against competition.

Customers

Customer analysis can be vast and complicated. Some of the important areas that a company analyzes includes: *

Demographics Demography () is the statistical study of human populations: their size, composition (e.g., ethnic group, age), and how they change through the interplay of fertility (births), mortality (deaths), and migration. Demographic analysis examin ...

Advertising Advertising is the practice and techniques employed to bring attention to a Product (business), product or Service (economics), service. Advertising aims to present a product or service in terms of utility, advantages, and qualities of int ...

that is most suitable for the demographic ** Market size and potential growth **Customer wants and needs **

Motivation Motivation is an mental state, internal state that propels individuals to engage in goal-directed behavior. It is often understood as a force that explains why people or animals initiate, continue, or terminate a certain behavior at a particul ...

to buy the product **

Distribution Distribution may refer to: Mathematics *Distribution (mathematics), generalized functions used to formulate solutions of partial differential equations *Probability distribution, the probability of a particular value or value range of a varia ...

channels (retail, online, wholesale, etc...) **Quantity and frequency of purchase **Income level of customer

Collaborators

Collaborators are useful for businesses as they allow for an increase in the creation of ideas, as well as an increase in the likelihood of gaining more business opportunities. The following type of collaborators are: *Agencies: Agencies are the middlemen of the business world. When businesses need a specific worker who specializes in the trade, they go to a recruitment agency. *

Suppliers A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers, while supply chain management deals with the flow of goods in distr ...

: Suppliers provide raw materials that are required to build products. Different types of Suppliers include manufacturers, wholesalers, merchants, franchisors, importers and exporters, independent crafts people and drop shippers. Each category of suppliers can bring a different skill and experience to the company. *

Distributors A distributor is an electric and mechanical device used in the ignition system of older spark-ignition engines. The distributor's main function is to route electricity from the ignition coil to each spark plug at the correct time. Design A ...

: Distributors are important as they are the holding areas for inventory. Distributors can help manage manufacturer relationships as well as handle vendor relationships. *Partnerships: Business partners would share

asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...

s and liabilities, allowing for a new source of capital and skills. Businesses must be able to identify whether the collaborator has the capabilities needed to help run the business as well as an analysis on the level of commitment needed for a collaborator-business relationship.

Climate

To fully understand the business climate and environment, many factors that can affect the business must be researched and understood. An analysis on the climate is also known as

PEST analysis In business analysis, PEST analysis (political, economic, social and technological) is a framework of external macro-environmental factors used in strategic management and market research. PEST analysis was developed in 1967 by Francis Aguila ...

. The types of climate/environment firms have to analyse are: * Political and regulatory environment: An analysis of how actively the government regulates the market with their policies and how it would affect the production,

distribution Distribution may refer to: Mathematics *Distribution (mathematics), generalized functions used to formulate solutions of partial differential equations *Probability distribution, the probability of a particular value or value range of a varia ...

and sale of the

goods and services Goods are items that are usually (but not always) tangible, such as pens or Apple, apples. Services are activities provided by other people, such as teachers or barbers. Taken together, it is the Production (economics), production, distributio ...

. * Economic Environment: An analysis of trends regarding

macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output (econ ...

, such as

exchange rates In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...

and

inflation rate In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...

, can prove to influence businesses. * Social/cultural environment: An analysis interpreting the trends of society, which includes the study of

demographics Demography () is the statistical study of human populations: their size, composition (e.g., ethnic group, age), and how they change through the interplay of fertility (births), mortality (deaths), and migration. Demographic analysis examin ...

education Education is the transmission of knowledge and skills and the development of character traits. Formal education occurs within a structured institutional framework, such as public schools, following a curriculum. Non-formal education als ...

culture Culture ( ) is a concept that encompasses the social behavior, institutions, and Social norm, norms found in human societies, as well as the knowledge, beliefs, arts, laws, Social norm, customs, capabilities, Attitude (psychology), attitudes ...

etc. * Technological analysis: An analysis of technology helps improve on old routines and suggest new methods for being cost efficient. To stay competitive and gain an advantage over competitors, businesses must sufficiently understand technological advances.

SWOT

is another method of situation analysis that examines the ''strengths'' and ''weaknesses'' of a company (internal environment) as well as the ''opportunities'' and ''threats'' within the market (external environment). A SWOT analysis looks at both current and future situations. The goal is to build on strengths as much as possible while reducing weaknesses. This analysis helps a company come up with a plan that keeps it prepared for a number of potential scenarios, as part of corporate planning or

strategic planning Strategic planning is the activity undertaken by an organization through which it seeks to define its future direction and makes decisions such as resource allocation aimed at achieving its intended goals. "Strategy" has many definitions, but it ...

Porter's five forces industry analysis

Porter's model involves scanning the environment for threats from competitors and identifying problems early on to minimize threats imposed by competitors. This model can apply for any type of business, from small to larger sized businesses. Porter's model is not just for businesses, but can also be applied to a country to help gain insight into creating a

competitive advantage In business, a competitive advantage is an attribute that allows an organization to outperform its competitors. A competitive advantage may include access to natural resources, such as high-grade ores or a low-cost power source, highly skille ...

in the global market. The ultimate purpose of Porter's five forces model is to help businesses compare and analyze their profitability and position with the industry against indirect and direct competition.

References

{{reflist, 30em Strategic management Market research